Large energy, infrastructure and extractive projects carry the potential for environmental and human rights impacts. At the same time, there is increased attention globally on social and environmental justice issues, especially as they relate to climate change, creating both an expectation and an opportunity for sustainable finance. At Citi, the financing decisions we make, and our assessment and management of environmental and social risks, are integral to acting responsibly as we enable growth and economic progress.
In 2017, we updated our Environmental and Social Risk Management Policy (ESRM Policy) to align with international standards for consultation with Indigenous Peoples, clarifying the need to exceed the requirements of national law, even in high-income OECD countries. We also began work with other leading global and regional banks and the United Nations Environment Programme Finance Initiative (UNEP FI) to develop scenario tests that will help evaluate climate-related risk based on the extent to which the earth warms. This is part of our ongoing work to evaluate climate risk in our portfolio and in support of the recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD).
In 2018, the outcomes from the UNEP FI pilot on TCFD will begin to inform our approach to managing climate risk, as well as our related disclosures. We will put our research on labor rights into action by enhancing our Palm Oil Sector Standard questionnaire with specific questions related to systemic labor risks on oil palm plantations, and we will seek opportunities for our clients’ to implement new labor welfare monitoring technologies to better assess labor practices deeper in the contractor supply chain. We will work to better understand how we can most effectively address deforestation risks in our clients’ activities and champion progress in conserving high conservation value forests. Citi will also actively participate in the Equator Principles update process, helping to design the next iteration of this global standard for banks evaluating environmental and social risks.