Citi has released its 2019 Environmental, Social and Governance (ESG) Report. The report builds upon Citi’s Global Citizenship Report, which the bank had been publishing since 2001. The ESG report highlights the ways in which Citi is enabling progress and sustainable growth in communities around the globe. While the report covers the period before the COVID-19 pandemic, the bank says that its broad themes - fighting climate change, addressing the affordable housing crisis and reducing economic inequality - continue to be key priorities.

“While we can’t yet see how COVID-19 will impact our society and communities over time, I’m confident that our ESG efforts to date will meaningfully contribute to Citi’s ability to weather this crisis,” said Michael Corbat, Citi CEO. “We are not only working to manage the short-term impact of COVID-19 but also are investing in long-term solutions focused on economic recovery and financial stability.”

Among the many priority areas this report addresses, key developments from 2019 include:

Sustainable progress

Citi financed and facilitated US$164bn in environmental finance activity (2014-2019) to help reduce the impacts of climate change, exceeding the bank’s US$100bn Environmental Finance Goal more than four years ahead of schedule. Recognising the increasing urgency of climate change, the bank continues to work to drive the transition to a low-carbon economy.

Supporting entrepreneurs

Citi launched the US$150m Citi Impact Fund, the largest impact investing fund created by a bank using its own capital, to make equity investments in “double bottom line” private sector companies that are making a positive impact on society. The bank also launched Scaling Enterprises, a US$100m loan guarantee facility in partnership with OPIC and the Ford Foundation, to provide early-stage financing to companies that expand access to financial services for low-income communities in emerging markets.

Affordable housing

Citi provided US$6bn in loans for affordable housing projects in the US, which is says makes the bank the largest affordable housing lender in the US for the tenth consecutive year.

Diversity and pay equity

Citi publicly shared its raw pay gap in 2019 and progress made to close this gap in 2020. The bank is also using data-driven insights to inform how it increases representation of women and US minorities in senior and higher-paying roles.

Ethical artificial intelligence

Citi has developed its own set of ethical principles for artificial intelligence (AI), which aim to ensure effective governance, risk management and responsible innovation in its use of AI.

Future of work

The Citi Foundation invested US$194m (2014-2019) to address global youth unemployment and workforce development through its Pathway to Progress initiative, which helps prepare youth for 21st century jobs and put them on a path to economic progress.

Taking a stand

Citi was the first US bank to sign on to UN Principles for Responsible Banking and the Citi CEO signed the Business Roundtable’s Statement on the Purpose of a Corporation.

Updating guidelines for sustainability principles

The Citi report was prepared in accordance with the Global Reporting Initiative (GRI) Standards: Core option and is aligned with the United Nations (UN) Global Compact and UN Guiding Principles on Business and Human Rights frameworks and the recommendations of the Task Force on Climate-related Financial Disclosures.

Guidance on ESG principles is critical to ensure that every firm understands the way that their actions relate to best practice. In the loan markets, this past week has seen new guidance documents released that support both the Green Loan Principles and the Sustainability Linked Loan Principles.

The Asia Pacific Loan Market Association (APLMA), Loan Market Association (LMA) and Loan Syndications and Trading Association (LSTA) have announced the publication of two new guidance documents, which aim to address some of the most frequently asked questions in relation to the Green Loan Principles (GLP) and the Sustainability Linked Loan Principles (SLLP).

The launch of the GLP in 2018 and the SLLP in 2019 were key milestones in the development of the global market for green and sustainability linked loan products. As the market for green and sustainability linked loans continues to grow and develop, market participants have sought clarification on the practical application of the GLP and the SLLP to their deals. By providing further information on these matters, the guidance documents aim to further support the expansion of the market for these important sustainable finance products.

The guidance documents were produced with input from each association’s respective green and sustainable finance working party, each of which consists of representatives from leading financial institutions and law firms across the globe and aims to find a globally acceptable approach to the granting of green and sustainability linked loan products.

“There has never been a more important time for financial markets to adapt and respond to climate-related risks and broader ESG issues,” said Gemma Lawrence-Pardew, senior associate director - Legal of the LMA. “Whilst the growth of the market for green and sustainability linked loan products has been very encouraging over the last few years, there is still more to be done to bring these products into the mainstream. We hope that the launch of these guidance documents will help to further break down barriers to the use of these innovative finance products in the syndicated loan market.”

“We have seen exciting growth in sustainable finance globally and we believe continued education and guidance around these types of loans will further support that momentum,” commented Tess Virmani, associate general counsel & EVP, Public Policy of the LSTA. “The new guidance documents together with the related frameworks will serve as the building blocks for broader market adoption. We are delighted to be taking this next step in our global coordination on sustainable finance.”

“We trust borrowers and lenders in the syndicated loan market across the globe wishing to take advantage of green and sustainability linked loan products will find these guidance documents informative,” concluded Rosamund Barker, head of Legal at the APLMA. “It has been a pleasure collaborating with our sister organisations in putting them together.”