Environmental
and Social Policy
Framework
July 2024
2 Environmental and Social Policy Framework
Contents
Introduction
Principles, Standards and Framework
Citi’s Sustainability Journey
Citi’s Approach to Climate Change
Citi’s Net Zero Commitment
Sustainable Operations
Sustainable Finance
Human Rights
Environmental and Social Risk Management
ESRM Policy Implementation
Policy Prohibitions
Areas of High Caution
Sector-Specific Requirements
Supply Chain
Sustainability-Related Governance
Appendix
2 Environmental and Social Policy Framework
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Environmental and Social Policy Framework | 3
Introduction
We believe that working to promote sustainability — both for our firm and for our clients — is good
business practice. Our commitment to sustainability is also aligned with, and contributes to, Citi’s
Mission and Value Proposition to serve as a trusted partner to our clients. This belief is reflected in
our dedication to financing business opportunities with positive environmental and social impacts,
actively mitigating environmental and social risks associated with client transactions which may give
rise to credit, reputation and/or legal risks for Citi, and reducing our operational footprint.
Our Environmental and Social Policy Framework describes our approach to net zero, sustainable
operations, sustainable finance, and human rights, and outlines our commitment to identify, measure,
and monitor environmental and social risks associated with our clients’ activity. In our pursuit to
generate enduring value for our clients, shareholders, and employees, Citi integrates comprehensive
environmental and social risk management policies into our core business strategies and expects clients
to mitigate the risks of their operations. Updates on our sustainability progress, including achievements
and goals, are detailed in our annual Environmental, Social and Governance reports and Climate reports.
Principles, Standards and Frameworks
To advance our sustainability goals and the best interests of our clients, and to encourage
responsible financial practices, we have adopted, joined or publicly endorsed the external principles,
standards and industry groups listed below, which help inform our approach to sustainable finance
and risk management:
• Amazon Finance Network
• European Clean Hydrogen Alliance
• Glasgow Financial Alliance for Net Zero
(GFANZ)
• Global Investors for Sustainable Development
Alliance (GISD)
• Green Bond Principles
• International Labour Organization’s (ILO) Core
Conventions
• Net Zero Banking Alliance (NZBA)
• Partnership for Carbon Accounting Financials
(PCAF)
• Pegasus Guidelines
• Poseidon Principles
• Principles for Responsible Banking
• Roundtable on Sustainable Palm Oil (RSPO)
• United for Wildlife Financial Taskforce
• United Nations Environment Programme
Finance Initiative (UNEP FI)
• United Nations Global Compact
• United Nations Guiding Principles on Business
and Human Rights
• United Nations Universal Declaration of
Human Rights
• Sustainable Aluminum Finance Framework
• Sustainable STEEL Principles
• Wolfsberg Principles
Furthermore, our internal policies and procedures reference additional international, industry-
wide good practices such as the World Bank’s International Finance Corporation (IFC) Performance
Standards and Environmental Health and Safety Guidelines, the Voluntary Principles on Security
and Human Rights, the Forest Stewardship Council, the Roundtable on Sustainable Soy and the
Accountability Framework. A description of our policies and programs, and how Citi is organized to
achieve maximum impact in our areas of focus, follows.
4 Environmental and Social Policy Framework
Citi’s Sustainability Journey
2000
Published first Global Citizenship Report
2014
Participated in the development of
The Green Bond Principles
2016
Commenced 2020 (3rd generation)
environmental footprint goals
2006
Issued world’ first local investment
grade microfinance bond
2008
Structured first securitization of
microfinance assets in the world
1997
Joined the UN Environment Programme
Finance Initiative (UNEP FI)
2003
Founding Signatory to the Equator Principles;
established our broader ESRM Policy
2010
Joined UN Global Compact
2007
First U.S. bank to publish Statement on Human Rights
Issued our first Climate Change Statement, supporting
a globally connected market-based climate policy
First major U.S. bank to set a GHG reduction target
Launched 10-year $50B Climate initiative
Participated in the first ever global IPO in microfinance
2015
Launched Sustainable Progress Strategy and
$100B Environmental Finance Goal
2017
Announced goal to source 100% renewable
electricity for our facilities by 2020
2018
Published first TCFD Report
2019
Issued inaugural €1B green bond
Participated in the development of the
Poseidon Principles
2023
Added Auto Manufacturing, Commercial Real Estate,
Steel and Thermal Coal Mining loan portfolios to our
Net Zero Plan
Participated in the development of the Sustainable
Aluminum Finance Framework with RMI
2021
Joined the Sustainable Markets Initiative Financial
Services Task Force
Announced Net-Zero Emissions by 2050 commitment
Announced $1T in sustainable finance
by 2030 commitment
Founding member of the Net Zero Banking Alliance
Partnered with the UN Framework Convention
on Climate Change (UNFCCC)
Issued $1B social finance bond
Joined Breakthrough Energy Catalyst and RMI
Center for Climate-Aligned Finance
2020
Joined Partnership for Carbon Accounting Financials
(PCAF)
Launched updated Sustainable Progress Strategy
Published 2020 TCFD report
Achieved 100% renewable electricity for all facilities
Joined the European Clean Hydrogen Alliance
Issued $1.5B green bond
Launched 3 year Action for Racial Equity
$1B commitment
Launched $200M Imapct Fund
2022
Published third TCFD Report and initial Net Zero Plan
Added Energy and Power loan portfolios
to our Net Zero Plan
Founding signatory of the Sustainable 2023 STEEL
Principles with RMI
2024
Disclosed Facilitated Emissions for Energy and Power
Citi’s Sustainability Journey
Citi has been engaging in sustainability and environmental initiatives for more than two decades, and
we continue to advance our leadership and partnerships across the industry.
Environmental and Social Policy Framework | 5
Citi’s Approach to Climate Change
Climate change is one of the most critical challenges facing our global society and economy in the
21st century. The data is irrefutable, and the world’s climate scientists agree that urgent action must
be taken to address the current and potential impacts of climate change, including chronic changes
to temperature and precipitation, rising sea levels, and more intense and frequent extreme weather
events. Some of these impacts are already being felt in communities across the globe, and longer-
term climatic changes have the potential to cause wide-ranging impacts affecting business and
society, including disrupted supply chains, damaged infrastructure, reduced crop yields and a decline
in biodiversity. These risks and impacts are exacerbated by inequality and unsustainable economic
development, which put additional pressure on land, water, forests and other natural resources.
These interconnected challenges endanger the vitality of communities all over the world and present
a threat to global prosperity if not managed properly. The financial sector has an important role to
play in addressing this challenge by supporting the transition to a sustainable, low-carbon economy
that balances the environmental, social and economic needs of society. Citi understands these critical
sustainability issues and believes we must respect and support the environment and human rights in
our operations, supply chain and client transactions.
We also understand the complexity of developing solutions to these challenges, which require a
combination of strong governmental policy and regulatory frameworks, corporate leadership, investor
engagement and individual actions. As one of the largest financiers of carbon-intensive sectors such
as energy, power and industrials, we know that the ambition to bring our business into alignment with
the ambitions stated in the Paris Agreement will not be easy. Moreover, aligning the global economy
with the Paris Agreement will require rapid and far-reaching transitions in energy systems, industrial
processes, land-use, buildings, transport and other infrastructure, all supported by an enabling policy
environment. We also know that delaying this transition could increase the costs, lock in carbon-
emitting technology and infrastructure, increase the risks of stranded assets and reduce the range
of effective responses to the challenge in the medium and long term. In light of these opportunities
and risks, in 2021 we announced our intent to achieve net zero GHG emissions associated with our
financing by 2050 and net zero for our own operations by 2030. For details on our Net Zero Plan and
the underlying interim targets, please see our climate reporting.
Achieving a low-carbon economy will also require increased financing of climate solutions. Building
on our previous $50 billion climate initiative from 2007-2013 and our $100 billion environmental
finance goal from 2014-2019, in 2021 Citi announced a commitment to $1 trillion in sustainable
finance by 2030. This commitment extends our previous environmental finance goal from $250 billion
and includes environmental and social criteria such as renewable energy, sustainable transportation
and circular economy as well as affordable housing, economic inclusion, education, food security
and healthcare.
More than 20 years of working with clients, partners, employees and other key stakeholders to
address the growing risks and opportunities related to climate have positioned us to respond to this
challenge. We have participated in or contributed to the development of market-based frameworks,
such as the Equator Principles, Green Bond Principles, the Poseidon Principles, the Pegasus
Guidelines, Sustainable Aluminum Finance Framework, and the Sustainable STEEL Principles, and are
reporting Citi’s financed emissions for certain carbon intensive sectors per the Partnership for Carbon
Accounting Financials (PCAF) Standard, and supporting the development of evolving methodologies
from PCAF and the market to enhance understanding of financed and facilitated emissions
1
. Citi was
1
96% Financed emissions are the GHG emissions generated by the operations and entities that financial institutions lend money to or invest in.
6 Environmental and Social Policy Framework
also one of the founding members of the U.N.-convened Net Zero Banking Alliance (NZBA). We know
there is more to do and we will continue to learn, engage and report on our progress, but we cannot
do it alone. We support responsible and interconnected governmental action on climate to align
incentives across the economy to support a low-carbon future, including robust approaches to carbon
pricing and disclosure of climate risks.
Citi’s Net Zero Commitment
In March 2021, we announced our intent to achieve net zero GHG emissions associated with our
financing by 2050 and net zero for our own operations by 2030. Our Net Zero Plan provides the
foundation for us to implement our goal of achieving our net zero commitment. Our Net Zero Plan is
summarized in the graphic below. Details on each of the elements in this plan, our interim 2030 targets
for select sectors, and our year-on-year progress toward meeting our net zero objectives are available
in our 2023 Citi Climate Report.
Citi’s Net Zero Plan
Governance
Board of
Directors and
relevant Board
Committees
ESG Council
Climate and
Sustainability
Council
Climate Risk
Steering Group
Climate Risk
Working Group
Foundations
Net zero emissions
by 2030 commitment
for operations
Net zero emissions
by 2050 commitment
for financing
Citi’s Net Zero
Transition Principles
Implementation
Strategy
Engagement
Strategy
Metrics and Targets
• Internal policy
development and
implementation
• Internal training and
capacity building
• Establishment of
specialized teams within
business units
• Sustainable and
Transition Finance
• Investor and stakeholder
engagement
• Regulator and policy-
maker engagement
• Client engagement
and review
• 2030 sectoral targets
• Absolute emissions
and emissions intensity
metrics (including
baselines)
• Sectoral exposures
• $1 Trillion Sustainable
Finance Goal
• Climate Risk Assessment
& Scorecard Output
Environmental and Social Policy Framework | 7
Sustainable Operations
Citi remains committed to reducing the environmental footprint of our facilities around the world. As of
December 2023, we have facilities across 95 countries. Our global operations give us an opportunity to
positively impact the communities where we live and work.
For our operations, we are targeting net zero emissions by 2030. Additionally, we set 2025
Operational Footprint goals, which help drive performance improvements related to greenhouse gas
(GHG) emissions, energy use, water consumption, waste reduction and diversion, and sustainable
building design. These goals are aligned with a pathway to limit global temperature rise to 1.5
O
C.
Our efforts to further integrate sustainable practices across our geographic footprint also include
renewable electricity sourcing, employee engagement and seeking opportunities for efficiency in
business travel. Citi also purchases voluntary third-party verified carbon credits consisting of a
portfolio of nature-based, energy efficiency and methane destruction credits in an amount equivalent
to our Scope 1 direct GHG emissions. Progress toward these operational footprint goals is provided in
our annual ESG reporting.
Sustainable Finance
The financial sector has an important role to play in helping to address climate change by providing
access to the capital needed for the transition to a low-carbon economy.
We have committed $1 trillion to sustainable finance by 2030 to finance and facilitate a wide array of
climate solutions, such as renewable energy, clean technology, water conservation and sustainable
transportation and in social finance, which includes activity in affordable housing and basic
infrastructure, diversity and equity, economic inclusion, education, food security and healthcare. Our
$1 trillion goal aims to support the transition to a sustainable, low-carbon economy that balances
society’s environmental, social and economic needs.
Tracking Progress
Each transaction we finance or facilitate must meet at least one of our criteria for environmental or
social finance to be counted toward the overall $1 trillion goal. These criteria were informed by external
standards and may therefore be subject to changes as industry guidelines are further developed.
Definitions of our environmental finance and social finance criteria are included below.
We track our sustainable finance activities using third-party financial league table credit, where
applicable. The industry league tables track public financial activities and rank financial institutions
based on their role (i.e., lead arranger, bookrunner, etc.) in each transaction. For financial products
for which there are no established league tables, we count the amount that reflects Citi’s financial
involvement in the deal.
For additional details on progress toward our $1 Trillion Sustainable Finance Goal, please see our
annual ESG reporting.
8 Environmental and Social Policy Framework
Environmental Finance Goal Criteria
Criteria Definition
Circular
Economy
Substitution of virgin raw materials with recycled or recyclable materials, elimination
and replacement of hazardous/toxic materials with sustainable or recyclable
materials, or recovery of materials from previously discarded products or projects
Clean
Technology
Products, equipment, methods and projects that mitigate greenhouse gas (GHG)
emissions
Energy
Efficiency
Residential and commercial energy efficiency improvements that reduce energy
consumption
Green
Buildings
Construction or renovation of certified buildings for reduction or efficiency in
energy use, resource consumption or for low GHG emissions
Renewable
Energy
Generation and/or storage of energy from renewable energy sources
Sustainable
Agriculture
and Land Use
Sustainable ecosystem management leading to carbon removal from the
atmosphere, reduced emissions, improvement of soil fertility and conservation of
natural resources. Activity related to sustainable agriculture, which includes work
with clients in the agricultural tech space and focused on alternative proteins.
Sustainable
Transportation
Zero- and low-emissions vehicles, public transportation or related infrastructure
construction and efficiency improvement
Water
Quality and
Conservation
Improve water quality, improved efficiency and increased availability and
conservation of freshwater resources
Social Finance Goal Criteria
Criteria Definition
Affordable
Basic
Infrastructure
Improve and/or expand access to clean drinking water, sanitation, clean energy,
sustainable transportation, and telecommunications infrastructure in low-
income or developing countries
Affordable
Housing
Construction, rehabilitation, and/or the preservation of quality affordable housing
for low- and moderate-income populations
Diversity
& Equity
Promote and support equitable participation in the market, asset ownership and
access to opportunities for racial, ethnic, LGBTQ+ and gender minorities and/or
other underrepresented populations
Economic
Inclusion
Improve access to credit and financial services in vulnerable or underserved
communities, including micro, small, and medium enterprise (MSME) financing.
Generate employment opportunities. Improve public spaces and community
resources
Education Improve access to, affordability of, and/or quality of primary, secondary, and
vocational education facilities and programs
Food Security Enhance agricultural productivity and access to safe, nutritious, and sufficient food
Healthcare Improve access to, affordability of, and/or quality of healthcare services
Environmental and Social Policy Framework | 9
Human Rights
Citi supports the protection and fulfilment of human rights around the world and is guided by
fundamental principles of human rights, such as those in the U.N. Universal Declaration of Human
Rights
2
and the International Labour Organization’s (ILO) Declaration on Fundamental Principles and
Rights at Work (including the fundamental core conventions)
3
. We engage with a range of stakeholders
to support our efforts to respect human rights in line with the U.N. Guiding Principles on Business and
Human Rights — a global framework for preventing and addressing the risk of adverse impacts on
human rights linked to business activity. To learn more about our commitment to human rights and
our approach to human rights protections see our Statement on Human Rights.
Environmental and Social Risk Management
Citi lends and mobilizes billions of dollars of capital toward a variety of companies and projects,
including sectors that may be associated with environmental and social impacts and risks. Before
making a financing decision, our Environmental and Social Risk Management (ESRM) Policy guides
our assessment of these risks and impacts. We then engage with our clients as they work to apply
international standards and responsible industry practice to mitigate and manage environmental and
social risks which can generate credit, reputation and/or legal risks to Citi.
Citi’s global ESRM Policy, which is regularly updated in response to emerging risks, applies across the
firm any time one of the following criteria is met:
1. A transaction is above relevant financial thresholds for the financial product type that has an
identified use of proceeds directed to a specific physical asset or project
2. Clients or transactions covered by one of Citi’s ESRM sector- specific requirements (see page 14-
18), or
3. Transactions that trigger one of the ESRM Areas of High Caution (see page 12-14).
Exclusionary Criteria
Financing for projects specifically focused on the following activities are not eligible toward the
$1 trillion goal:
• Large scale hydropower plants that have a generation capacity of over 25 MW, unless the project
has lifecycle GHG emissions intensity of no greater than 100g CO
2
/kWh or power density of at
least 5 W/m
• Fossil fuel projects, including:
– Refined or alternative coal technologies
– Gas-to-liquid projects
– Natural gas projects
2
The Universal Declaration of Human Rights was adopted by the United Nations in 1948 and is widely regarded as the international
community’s fundamental human rights framework. The rights it recognizes are implemented in international law by the International
Covenant on Civil and Political Rights (1966) and the International Covenant on Economic, Social and Cultural Rights (1966). As explained in
the Guiding Principles on Business and Human Rights, we also recognize that other international instruments can inform the responsibility to
respect, particularly those articulating the rights of vulnerable groups.
3
The ILO core conventions cover the freedom of association and collective bargaining, elimination of forced and compulsory labor, elimination
of discrimination, abolition of child labor, and a safe and healthy working environment.
10 Environmental and Social Policy Framework
ESRM Policy Implementation
Implementation of the ESRM Policy is a shared responsibility across Citi business and risk teams
globally when any of the above listed policy triggers apply.
Updates to the ESRM Policy are reviewed by internal governance forums or committees and subject
to review and challenge. Application of the ESRM Policy is subject to internal controls to ensure
adherence by Citi businesses. Citi policy governance allows requests for exceptions in exceptional
cases, with reasons for the exception clearly articulated and a formal request sent to the Policy Owner.
Risk Screening of Transactions
When potential transactions are first referred to the ESRM unit, we start by evaluating if it falls
within the scope of the ESRM Policy. We work to identify any relevant environmental and social risks
associated with the proposed transaction and based on the risks identified determine whether any
additional due diligence or client engagement is required in order to move forward. As one part of
a holistic review and approval process for all transactions and client relationships covered under
the ESRM Policy, Citi considers a client’s commitment, capacity and track record related to its
environmental and social performance.
Risk Screening for Project- Related Transactions
Our approach to project-related transactions is informed by internationally recognized standards and
frameworks including those articulated by the World Bank, the International Finance Corporation
(IFC) and the Equator Principles. At the marketing stage for project-related transactions, the ESRM
unit works closely with bankers to categorize the magnitude of potential impacts associated with a
transaction using criteria in part defined by the IFC and to screen for any environmental or social risks
associated with the transaction. These categories include:
• Category A — use of proceeds is likely to have potential significant adverse social or environmental
impacts that are diverse, irreversible or unprecedented;
• Category B — use of proceeds is likely to have potential limited adverse social or environmental
impacts that are few in number, generally site-specific, largely reversible and readily addressed
through mitigation measures; and
• Category C — use of proceeds is expected to have minimal or no social or environmental impacts.
The chart in the Appendix provides an illustrative summary of steps taken in a typical Citi project-
related finance transaction.
For projects in countries who are not members of the Organization of Economic Cooperation
and Development (OECD), Citi requires benchmarking against the relevant IFC sector-specific
Environmental, Health and Safety (EHS) Guidelines, which address topics including, but not limited
to, pollution prevention and abatement and worker and community health and safety, as well as the
issue-based IFC Performance Standards, which include:
• PS 1 — Assessment and Management of Environmental and Social Risks and Impacts
• PS 2 — Labor and Working Conditions
• PS 3 — Resource Efficiency and Pollution Prevention
Environmental and Social Policy Framework | 11
• PS 4 — Community Health, Safety and Security
• PS 5 — Land Acquisition and Involuntary Resettlement
• PS 6 — Biodiversity Conservation and Sustainable Management of Living Natural Resources
• PS 7 — Indigenous Peoples
• PS 8 — Cultural Heritage
For transactions in high-income OECD countries, Citi requires compliance with all relevant local
and national environmental laws, such as those on impact assessment, public consultation and
stakeholder engagement processes, and permitting conditions. Furthermore, we evaluate projects in
these countries against relevant responsible industry practice.
Independent Review
All Category A and certain higher risk Category B project finance and project-related corporate loans
require review by an independent environmental and/or social expert with relevant expertise, not
associated directly with the borrower. Independent Review may also be required of other ESRM high
risk transactions or client relationships, especially those involving Areas of High Caution (see page
12-14). Independent Review contributes to Citi’s due diligence by reviewing the environmental and
social assessment documentation and consultation process documentation, assessing ESRM Policy
alignment, identifying gaps and proposing corrective actions to fill those gaps.
Action Plans
Following either ESRM internal review or Independent Review, if gaps are identified between a client’s
current plans or operations and ESRM Policy requirements, an Environmental and Social Action Plan
(ESAP) is developed. The ESAP contains targeted environmental and social actions with timelines and
deliverables to demonstrate completion that bring the project into alignment with the ESRM Policy
over a reasonable timeframe. In project-related loans, the ESAP becomes a binding covenant of the
loan agreement and alignment with it is monitored, either by an independent consultant or by the
client’s environmental team members, with results reported to Citi on a regular basis.
Policy Prohibitions
Citi does not do business with companies when our due diligence indicates that they are active in the
following activities, which we have determined expose Citi to unreasonably high risk:
• Production or activities involving modern slavery, human trafficking or forced labor, defined as all
work or service, not voluntarily performed, that is extracted from an individual under threat of force
or penalty;
• Production or activities involving harmful or exploitative forms of child labor. Harmful child labor
means the employment of children that is economically exploitive, or is likely to be hazardous to,
or interfere with, the child’s education, or be harmful to the child’s health, or physical, mental,
spiritual, moral or social development;
• Illegal logging;
• Production or trade in any product or activity deemed illegal under the host country laws or
12 Environmental and Social Policy Framework
regulations (including those ratified by host countries under international conventions
and agreements);
• Production or trade in wildlife or products regulated under CITES (the Convention on International
Trade in Endangered Species of Wild Fauna and Flora);
• Drift net fishing in the marine environment using nets in excess of 2.5 km in length;
• Production or shipment of cluster munitions.
Furthermore, please refer to the ESRM sector-specific requirements and Areas of High Caution for
additional project-related requirements.
Areas of High Caution
Consistent with the precautionary principle of “do no harm,” Citi recognizes that there are certain
Areas of High Caution that require special attention, focus and respect due to heightened risks which
may also subject Citi to associated credit, reputation and legal risks. These Areas of High Caution
apply where these risks are identified, regardless of financial product or sector. Citi only proceeds
with transactions that impact such Areas of High Caution after a careful review of impacts and risks,
and confirmation that mitigation measures have been or will be designed to align with international
responsible industry practice. Where applicable, Citi considers relevant national laws and international
standards such as the U.N. Guiding Principles on Business and Human Rights, and, for emerging
markets, the IFC Performance Standards.
In addition, in project-related transactions where these risks are present, Independent Review of
social and environmental assessment documentation by a qualified independent consultant with
the relevant expertise may be required, as determined by the ESRM unit, to evaluate whether risks
and impacts are being appropriately managed. These Areas of High Caution include the following
thematic areas.
High Biodiversity Risk
Biodiversity refers to the variability, complexity and interdependence of species and ecosystems on
land and in the ocean. Biodiversity risk analysis considers the potential impacts activities can have on
the health and integrity of global biodiversity and ecosystem services. This risk is of particular concern
in areas of high biodiversity with critical habitat to support species and/or areas of high conservation
value, such as those found in the Amazon rainforest, other tropical rainforests, Ramsar Wetlands,
mangroves, etc. In addition, biodiversity degradation and deforestation exacerbate the problem of
climate change. Transactions with high biodiversity risk require close review of the client’s biodiversity
management. For project-related lending in non-OECD countries, this includes assessment of project
biodiversity management plans against IFC Performance Standard 6 on biodiversity and natural
resource management. Citi will not finance mining projects that utilize submarine waste disposal due
to heightened risks.
Significant Cultural Heritage Value
Cultural heritage encompasses properties and sites of archaeological, historical, cultural, artistic, and/
or religious significance. It also refers to unique environmental features and cultural knowledge, as well
as intangible forms of culture embodying traditional lifestyles that should be preserved for current and
future generations. Projects or transactions that may impact cultural heritage require close review by
Environmental and Social Policy Framework | 13
the ESRM unit. Citi will not finance projects that negatively impact UNESCO World Heritage Sites.
Project-Related Conflict Risk
Project development in sectors with large land requirements, such as mining, oil & gas and
agribusiness, may trigger conflict due to land conversion needs. This need for resources and land may
also trigger company-community conflict presenting risk to rights holders. In these project-related
financing cases, Citi carefully considers key conflict factors such as sources of tension, root causes
of conflict, different stakeholders’ perspectives and motivations, and ability to address such risks.
In addition, projects in fragile and conflict-affected areas present risk in the management of project
security, for example mining projects involving “conflict minerals.” In these cases, we recommend our
clients use the Voluntary Principles on Security and Human Rights as guidance for managing their
engagement of security forces.
Elevated Human Rights Risks
Certain risk factors in client activities can lead to elevated human rights risks that require special
attention and enhanced human rights due diligence. Some factors that may increase human rights
risks include activities or projects:
• In countries or regions with both the presence of significant vulnerable populations and with
a history of known human rights abuses relevant to the sector. Vulnerable groups may have
increased difficulty in adapting to changes brought by projects and may not have access to
adequate protection, respect and remedy for their human rights, and thus significant presence of
these groups in the project area of influence increases the social risks;
• In countries or regions with a history of known human rights abuses related to the sector and weak
enforcement of labor laws, especially occupational health and safety and freedom of association;
• Involving in-migration of large labor forces, which can lead to a higher risk of human trafficking or
forced labor;
• With environmental justice concerns due to disproportionate adverse environmental or health
impacts on racial or ethnic minority communities, or economically disadvantaged communities;
• Related to constructing or operating private prisons.
Indigenous Peoples
Citi recognizes and respects the unique historical treatment and collective rights of Indigenous
Peoples, and understands that these communities’ languages, beliefs, cultural values and lands
are often under threat, representing a higher degree of vulnerability than other project-affected
communities. Citi will use extra caution and conduct enhanced due diligence (which may require
Independent Review by a qualified social expert) when the transaction may pose adverse effects to:
• An area used or traditionally claimed by an Indigenous community;
• Their communal self-preservation based on traditional ways of life; or
• Their use or enjoyment of critical cultural heritage that is essential to their identity and/or the
cultural, ceremonial or spiritual aspects of their lives.
14 Environmental and Social Policy Framework
Building upon government efforts, companies must not infringe upon the rights and protections
for Indigenous Peoples contained in relevant national law, including those laws implementing host
country obligations under international law. Globally, in project-related lending for projects involving
involuntary resettlement of indigenous communities, significant impacts on land and natural
resources traditionally used by the community, or significant impacts on critical cultural heritage,
project sponsors are expected to have engaged in meaningful consultation with directly affected
Indigenous Peoples, with the goal of achieving Free Prior and Informed Consent (FPIC).
Large-scale Resettlement
All transactions involving large-scale resettlement or displacement of people require special attention
and enhanced due diligence.
Sector- Specific Requirements
Citi recognizes that there are a number of important areas that require increased attention via sector-
specific standards or guidance as described below to help mitigate heighted environmental and social
risks and associated credit, reputation and/or legal risk. Citi’s sector-specific requirements apply at
the client relationship level regardless of financial product or threshold.
Agribusiness
We review agribusiness clients within the scope defined in the subsectors below for direct and supply
chain deforestation or land conversion risks, commitments to strong environmental and social policies,
relevant sustainability certifications, and/or supply chain traceability programs. As part of these
reviews, the external standards Citi refers to in the subsectors below address a number of Citi’s Areas
of High Caution such as biodiversity risk, human rights risks, and the respect and protections for the
unique cultural values and vulnerability of Indigenous Peoples in activities that affect their territorial
lands and livelihoods.
Forestry
Citi requires environmental and social risk assessments prior to onboarding and at annual review for all
forestry clients that are directly involved in logging or primary processing of timber from either natural
forests or plantations. We review all forestry clients’ policies, practices and track record on forestry
management to evaluate alignment with responsible industry practice, including labor, community
engagement, systems to avoid deforestation or land conversion of high conservation value and high
carbon stock forests, and proper prevention of fire risk. To help mitigate associated risks, all forestry
clients operating in tropical forests are required to be members of the Forestry Stewardship Council
(FSC) and commit to a time bound action plan to achieve FSC certification within three to five years
of client onboarding or new land acquisition, which includes establishing management systems
consistent with the principles of No Deforestation, No Peat and No Exploitation. FSC certification may
be required in other geographies if concerns of impacts to high conservation value forests are identified
thereby increasing risk. Forestry clients are reviewed annually by Citi to confirm ongoing certification
status and management practices. Citi also has a long-standing public commitment not to engage in
business with companies that we know to be in violation of local or national forestry and logging laws.
If any forestry client is unable or unwilling to pursue the required certification or undertake corrective
actions, ESRM would escalate the relationship to the relevant risk committees for consideration to exit
the relationship.
Environmental and Social Policy Framework | 15
Palm Oil
Citi is a member of the Roundtable on Sustainable Palm Oil (RSPO), a respected global
multistakeholder forum setting environmental and social criteria for the palm oil industry. We have
long required all palm oil clients involved in the upstream production of palm oil (e.g., growers and
mills) to become members of the RSPO. These clients must commit to a time-bound action plan to
achieve full RSPO certification within three to five years of becoming a Citi client. Downstream palm
oil refiners and traders are reviewed for RSPO membership, zero deforestation policies, as well as
links to Areas of High Caution in their supply chain and encouraged to obtain RSPO certification if
relevant. Citi ESRM team monitors progress annually on alignment with RSPO Principles and Criteria
to ensure palm oil clients’ operations are consistent with the principle of No Deforestation, No Peat
and No Exploitation. We evaluate our clients’ identification and preservation of high conservation
value areas (including peatlands and high carbon forests), implementation of responsible industry
practice fire prevention and management systems, adherence to international labor standards, and the
implementation of FPIC for project-affected communities. Any palm oil producer client who has not
achieved certification by 2025 will be escalated to the Head of ESRM and relevant risk committees for
consideration to exit the relationship.
Soy
The production of soy presents risks of deforestation and biodiversity loss in sensitive ecoregions
across South America, including the Amazon Forest, the Cerrado tropical savanna, the Atlantic Forest
and the Gran Chaco Forest. To address these risks, clients that are soy producers in these countries,
or processors and traders who source from these countries, must be escalated to the ESRM unit
to understand if their operations overlap with sensitive ecoregions. Clients that are identified as
producing in or sourcing from the above ecoregions will be reviewed for membership and certification
with the Roundtable on Responsible Soy (RTRS) or equivalent environmental and social management
systems to address deforestation. Existing clients in these ecoregions who are not already certified
will be encouraged to pursue RTRS membership or other relevant certifications. New clients in these
ecoregions will be evaluated for membership and certification of RTRS or equivalent certification with
a goal of working toward full certification.
Beef
The beef industry can act as a driver of deforestation and land clearance in biodiverse ecoregions
of Argentina, Bolivia, Brazil, Colombia, Ecuador, Paraguay and Peru. Citi evaluates clients directly
involved in cattle rearing, fattening and finishing in these countries, as well as slaughterhouses and
meat processing plants sourcing from these countries, to determine if their operations or supply
chains overlap sensitive ecoregions – specifically the Amazon Forest, the Cerrado tropical savanna,
the Pantanal grasslands and the Gran Chaco Forest. For these clients, Citi reviews their policies and
management plans for clear commitments to 100% traceability of their supply chain in alignment with
the Accountability Framework Initiative. This framework provides guidance based on international
norms and responsible industry practices for companies to prevent deforestation driven by the
production of agricultural commodities, including livestock, in their operations and supply chains.
Citi reviews these clients annually and encourages time-bound improvement in alignment and
traceability commitments.
16 Environmental and Social Policy Framework
Coal
As a carbon intensive energy source, global alignment with a low-carbon economy calls for a rapid
transition away from thermal coal as a fuel source. This trend increases the risk of stranded assets
which leads to increased credit risk related to financing coal.
Coal Mining
Citi will not provide project-related financing for new thermal coal mines or significant expansion of
existing mines, and has set targets to phase out our financing of mining companies deriving ≥25% of
their revenue from thermal coal mining:
• By the end of 2025, we will reduce our credit exposure to these companies by at least 50% from a
2020 baseline;
• After 2025, we will no longer facilitate capital markets transactions or mergers and acquisition
advisory and financing for these companies;
• By the end of 2030, all remaining exposure to these companies will be reduced to zero.
Approval for any transaction for a coal mining company requires escalation for review of the company’s
transition away from coal.
Coal-fired Power Generation
Citi is committed to helping our Power clients transition to a Paris Agreement-aligned future. Globally,
Citi will not provide project-related financial services for transactions supporting the construction or
expansion of coal-fired power plants, including refinancing recently constructed plants. This includes
transactions supporting the supply of all components, equipment, materials and services directly
required for the construction of such plants.
In addition, in line with our net zero targets we have established a set of increasing expectations over
time for our clients with coal-fired power generation.
Citi expects clients with coal-fired power generation to:
• Publicly report their GHG emissions annually consistent with the GHG Protocol; and
• Engage with Citi as requested on their low-carbon transition strategy to diversify away from coal-
fired power generation. It is our expectation that such strategies will align with Paris Agreement
decarbonization pathways by 2030 (for clients with power generation in OECD countries) and by
2040 (for clients with power generation in non-OECD countries).
Furthermore, Citi commits to:
• Not provide acquisition financing or acquisition advisory services related to coal-fired power
plants. Exceptions may be considered if the proposed transaction is being pursued in the context
of a low-carbon transition strategy or managed phaseout.
• Not onboard any new clients with ≥20% of power generation from coal-fired power plants unless
such client meets the above criteria; i.e., is pursuing a low-carbon transition strategy.
Environmental and Social Policy Framework | 17
• Not onboard any new clients that have plans to expand coal-fired power generation.
After 2025, Citi commits to:
• No longer extend capital and/or provide other financial services to clients that do not have a
low-carbon transition strategy to diversify away from coal-fired power generation and align with
Paris Agreement decarbonization pathways by 2030 (for clients with power generation in OECD
countries) or by 2040 (for clients with power generation in non-OECD countries). Exceptions may
be considered, with escalated senior management review, for regulated utilities or state-owned
entities that are not able to decarbonize in line with the policy due to legal and/or regulatory
requirements, or if the proposed transaction is being pursued in the context of a low-carbon
transition strategy or managed phaseout.
• Not onboard any new clients with a material business line in power generation unless they align
with a Paris Agreement decarbonization pathway as described above.
After 2030, Citi commits to:
• For clients with power generation operations in OECD countries, no longer extend capital and/or
provide other financial services unless the share of power generation from coal-fired power plants
is less than 5%.
• For clients with power generation operations in non-OECD countries, no longer extend capital
and/or provide other financial services unless such clients have a low-carbon transition strategy
that is designed to reduce the share of power generation from coal-fired power plants to less
than 5% by 2040.
Commercial Firearms
Citi is committed to promote the adoption of responsible industry practices with our applicable
business relationships regarding the manufacture, distribution and retail sale of firearms. This
commitment is designed to respect the rights of responsible gun owners and the responsible
businesses that serve them, while promoting community and individual safety. In pursuit of this goal,
Citi requires U.S. Firearms Retailers and Firearms Manufacturers who sell through U.S. retail channels
to conform to responsible practices regarding the sale of firearms. For retailers, these responsible
practices include only selling firearms to individuals who have passed a completed background check
with a “Proceed” response; placing additional requirements on the sale of firearms to individuals under
21 years of age (such as firearms training as active or former military or law enforcement, or successful
completion of a gun safety or hunter safety training by a certified instructor); and not selling bump
stocks or high-capacity magazines (e.g., for long guns, magazines that hold more than 10 rounds, and
for hand guns, magazines that either extend beyond the bottom of the pistol grip or attach outside of
the pistol grip, and hold more than 10 rounds). For manufacturers, this entails ensuring that they sell
firearms and ammunition only through retail channels that follow the retailer responsible practices
identified by the policy.
Military Equipment
Citi will not directly finance the production, distribution or sale of cluster munitions, biological or
chemical weapons, or nuclear weapons. In the rare case where we may be asked to provide direct
financing of the production or shipment of other military equipment such as munitions, missiles,
18 Environmental and Social Policy Framework
fighter aircraft, armored vehicles or warships, escalation and senior consultation is required to
determine if allowed.
Nuclear Power
Citi recognizes the complexities involved in the responsible management of nuclear power. Project-
related transactions will be evaluated against host-country environmental laws, regulations, and
permits, and in emerging markets, against the international nuclear environmental guidelines that are
set forth by the International Atomic Energy Agency (IAEA) and IFC standards. Construction of new
nuclear power plants will be subject to independent review by qualified consultants.
Oil and Gas
The oil and gas sector presents a number of sensitive environmental and social risks that must be
carefully assessed to evaluate whether companies’ policies and management approach align with
responsible industry practice. Our due diligence approach to any project-related transaction in this
sector includes the risk management policy implementation (see Risk Screening for Project- Related
Transactions on page 10 or the appendix) and focuses on oil and gas sector-specific risks such as
emergency response and spill response plans, methane and other emissions management, and the
experience and operational track record of the company, prior to making a decision whether to proceed.
Beyond project-related lending, the ESRM unit evaluates the risk profile of oil & gas clients based
on the geographic locations of their assets, the risks associated with their activities (such as frontier
exploration, oil sands, LNG terminals, midstream pipelines, developments in sensitive areas), potential
overlaps with ESRM’s Areas of High Caution, any patterns of regulatory violations or safety incidents,
and large-scale community opposition or litigation related to environmental or social issues.
Citi does not provide project-related financial products or services to oil and gas exploration,
development or production in the Arctic Circle due to heightened risks including elevated operational
risk, technical complexity, credit risk, and environmental risk. In addition, Citi does not provide
project-related financial products or services for expansion of oil and gas operations in the Amazon
due to sensitive biodiversity risks in the region and heightened risks. Any general corporate purposes
transaction for clients with operations in the Amazon requires enhanced ESRM due diligence.
Supply Chain
Citi strives to maintain sustainable practices in its supply chain. Suppliers must adhere to all
applicable laws and comply with Citi’s Requirements for Suppliers which communicate relevant Citi
policies and mandate, among other requirements, supplier policies and practices designed to prohibit
discrimination in the workplace and address the risk of forced labor, child labor or other indicators of
modern slavery.
Citi’s Statement of Supplier Principles outlines aspirational guidelines in the areas of ethical business
practices, human rights in the workplace and environmental sustainability which it encourages its
suppliers to maintain.
Citi maintains a process to identify risks related to its suppliers, including risks of modern slavery.
Through this Corporate Responsibility Questionnaire process, Citi also seeks information from
suppliers on sustainability-related matters addressed in the Statement of Supplier Principles.
Environmental and Social Policy Framework | 19
Citi’s commitment to a sustainable supply chain includes creating mutually beneficial business
relationships with diverse suppliers. Citi’s Supply Chain Development, Inclusion and Sustainability
Program also aims to increase opportunity and development of diverse-owned and small business
suppliers through training and engagement.
Sustainability-Related Governance
The Citi Board of Directors has ultimate oversight of our work to identify, assess and integrate
environmental- and social-related risks and opportunities throughout Citi, including our climate-
related work and diversity, equity and inclusion and talent efforts. The Board receives reports from key
personnel on our progress and key issues on a periodic basis.
The Nomination, Governance and Public Affairs Committee of the Board receives reports from
management on Citi’s activities pertaining to environmental sustainability, climate change, human
rights and other environmental and social issues, as well as Citi’s strategy for engagement with
external stakeholders. For more information on the roles and responsibilities of this committee, see the
Nomination, Governance and Public Affairs Committee Charter.
The Audit Committee of the Board has oversight over the controls and procedures related to Citi
group-level ESG and climate-related reporting. For more information on the roles and responsibilities
of this committee, see the Audit Committee Charter.
The Risk Management Committee of the Board provides oversight of the Citi Risk Management
Framework and risk culture and reviews our key risk policies and frameworks, including receiving
climate risk-related updates. For more information on the roles and responsibilities of this committee,
see the Risk Management Committee Charter.
Citi’s full Board provides oversight of Citi’s net zero strategy and related metrics and activities.
Citi’s ESG Council provides a senior management level forum for oversight of our ESG-related
commitments. The ESG Council, which meets quarterly, is chaired by the CEO and includes members
of the Executive Management Team as well as subject matter experts. Other steering groups, including
the Climate Risk Steering Group and the Climate and Sustainability Council, also exist to provide
forums for discussion, debate and deep dives into key topics, and the leads of those steering groups
are members of and/or provide reports to the Global ESG Council.
The senior-executive level Climate Risk Steering Group consists of Citi leaders from across the
firm who provide guidance, feedback and support with regards to the integration of climate risk
management. The Steering Group is chaired by the Head of Climate Risk and facilitates engagement
with senior global leadership, ensuring senior management commitment and provides assistance to
help coordinate resources across the firm.
The Climate and Sustainability Council provides input and guidance on relevant policies and
initiatives and helps drive sustainability through the businesses. The committee is chaired by the
Chief Sustainability Officer (CSO) and includes other executives from Banking, Risk, Public Affairs,
Operations, and ESRM. Committee meetings are held approximately bi-monthly.
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Appendix
Illustrative steps in risk screening process for project-related finance transactions.
Project
Review Stage
Client Actions Citi Banker Actions
Citi Independent Risk
Review & Approval
Business
Opportunity
Identified
• Client seeks competitive
financing terms from banks
• Preparing or finalizing
environmental and
social assessment
documentation
• Business opportunity
identified for internal
review and discussion
• Banker notifies risk teams,
including Environmental
and Social Risk
Management (“ESRM”),
of early-stage client
discussions prior to formal
approval
Greenlight
Memo &
Marketing
Stage
• Receives and reviews
marketing letter or
proposal from Citi and
other banks
• Initial approvals required
from appropriate Senior
Business Heads to submit
proposal/marketing letter
to client
• Approval to send marketing
letter or proposal required
from Independent Risk as
well as ESRM unit
• Project screened for
potential environmental
and social risks, including
human rights risks
• Applicable ESRM Policy
requirements identified,
which in emerging markets
includes alignment
with IFC Performance
Standards and IFC EHS
Guidelines
Discussion of
Citi Proposal
with Client
• Reviews and seeks
clarification on Citi
proposals, including ESRM
requirements
• Accepts, modifies or
rejects Citi proposal
• If proposal accepted, Citi is
mandated by the client to
provide financing
• Includes discussion of ESRM requirements, if requested
by client
• For higher risk transactions, an Independent
Environmental and Social Consultant (IESC) is appointed
to review documentation and review compliance with Citi’s
ESRM Policy and applicable IFC Performance Standards
and IFC EHS Guidelines
Detailed Due
Diligence
Process,
Including
Term Sheet
Negotiations
• Client provides to
Citi ESRM-related
documentation (e.g.,
Environmental and Social
Impact Assessment
Management Plan,
Action Plan, stakeholder
consultation information)
• Banker, ESRM and IESC (when required) review
environmental and social documentation, including
documentation on any human rights risks and climate risks
if relevant to transaction
• When gaps exist between current plans and Citi
ESRM Policy requirements, ESRM/IESC prepare an
Environmental and Social Action Plan (“ESAP”) with
recommended actions to properly mitigate and/or manage
any environmental, social and human rights risks
Environmental and Social Policy Framework | 21
Project
Review Stage
Client Actions Citi Banker Actions
Citi Independent Risk
Review & Approval
Closing &
Disbursement
• Final facility terms agreed
• Signs loan documentation
• Receives first
disbursement
• Citi confirms conditions
precedent met, including
any ESRM-related
conditions
• Citi signs loan
documentation and
disburses loan
• Timeframe and condition
set for IESC monitoring and
reporting on ESAP items,
if required dependent on
transaction risks
Ongoing
Monitoring
• If monitoring is required
based on previously
agreed terms, client plans
for and submits monitoring
reports to lenders
regarding compliance
with environmental and
social conditions
• Ongoing monitoring takes
place during agreed upon
intervals (annually or more
frequent depending on
risks) if needed
• Receives and reviews
ongoing environmental and
social monitoring reports
from client and/or IESC
• Engages with the client
and/ or IESC if needed to
understand progress on
actions
• If significant areas
of noncompliance
are identified, senior
approvers are notified and
a corrective action plan
devised to bring client back
into compliance
Note: This chart provides an illustrative summary of steps taken in a typical Citi project-related finance transaction. All transactions are not
identical, and the review, approval and monitoring steps described above may be tailored, reduced or supplemented based on the facts and
circumstances of a particular transaction.
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