Thank you for that warm welcome.
I’d also like to thank the leadership and membership of The Detroit Economic Club for this opportunity to speak to such an influential group.
When business and government leaders founded this forum during the Depression, our nation faced tensions and challenges that were exacerbated by a polarized social and political environment.
The same can be said of our country today.
Americans have lived through the financial crisis. While the government’s response was the right one, the crisis left many feeling as if the system is stacked against them, and that it absolved wrongdoers of accountability.
Too many people in our country feel like our era’s defining economic trends—including globalization—have hurt them economically. While we have historically low unemployment, wage growth has been stubborn and many live with the anxiety of having their jobs taken away by technology.
The wealth gap has widened. Too many believe that their children will have fewer opportunities than they have had. Many in our country have lost faith in the American dream.
And that has caused some to question whether our capitalist system is the right one.
Here is how I see it:
I believe in capitalism. I believe in free markets. I believe in the right of free enterprises to conduct their businesses. And I believe in reasonable regulations. We wouldn’t be the country we are today without these things.
But I also believe that for businesses to survive and thrive in today’s society, we need to help solve the societal challenges we all face. We can’t be on the sidelines.
We need to have business models that have a positive impact on society and do not rely solely on philanthropy to show that we are solid corporate citizens.
Creating shareholder value will always be necessary; but creating stakeholder value is critical.
Today, these two goals are more closely connected than ever before. People increasingly are demanding that private enterprise play a role in finding solutions to the challenges we face.
Employees, for their part, want to work at companies that reflect their own values and priorities.
Let me tell you about our approach to some of these issues.
At our core, and at our best, we work with our clients to solve problems.
With significant financial resources to deploy, we are scaled to serve our clients and help them compete in today’s economy. That client could be a multinational company like Ford, where I spent time this morning.
It could be a local commercial bank client like Edward C. Levy, a legend in road construction founded on a handshake between its namesake and Henry Ford.
Or it could be a public sector client including local governments like the state of Michigan.
Our commitment to solutions can be seen through decisions we make every day, about who we work with, how we work with them, and how we treat people who work for us.
Think about one of our biggest challenges as a nation: our poor infrastructure.
The American Society of Civil Engineers estimates that we’ll fall $1.5 trillion short of the required infrastructure investment needed by 2025.
Not only are there implications for public health and safety, there is an economic cost to the status quo.
The annual cost of highway congestion: $120 billion.
Airport congestion and delays? $35 billion.
That’s where a bank like ours can help. Our balance sheet allows us to finance projects that would be out of reach for smaller institutions.
Just last year, Citi provided the financing for $26 billion in U.S. infrastructure projects, including bridges, hospitals, airports, water, and public power.
I’d like to mention one project we did in Detroit which we are particularly proud of.
During the bankruptcy, Citi committed $60 million from our own balance sheet and subsequently underwrote nearly $200 million in bonds on behalf of the Public Lighting Authority of Detroit. Those funds financed the installation of over 65,000 energy-efficient streetlights, improving the quality of life throughout the city.
Let’s look at another challenge: affordable housing.
I mentioned the economic pressure too many Americans feel acutely. Over 11 million low-income households in the U.S. comprise over a quarter of all rental households. Of those, 70 percent spend over half their incomes on rent and utilities.
To address this urgent need, last year Citi provided $6 billion in financing for the construction and reconstruction of more than 36,000 affordable housing units.
That level of support not only set a new record for Citi, it maintained our ranking as the leading financier of affordable housing in the U.S. for the ninth year in a row.
Now, climate change. While some may doubt its existence, we believe it is real, that it is accelerating, and that our collective efforts to address it are the greatest combination of risk and opportunity of our time.
According to the most recent and compelling scientific assessments, we cannot afford to wait to take action. Serious impacts from climate change go well beyond extreme weather events like the devastating hurricanes we have seen in the last few years.
At the same time, we need to recognize that many people depend on the fossil fuel industry for their livelihood.
And we have clients active in this sector, which we aren’t just going to walk away from. Instead, we are working with many of them to support their transition to a low-carbon economy, creating green-collar careers in the process.
In 2014, we made a ten-year, $100 billion environmental finance commitment, funding clean energy and other sustainable projects, including the first offshore wind farm in the country. Illustrating the great demand for this capital, we will meet our goal this year, four years early.
Let me be clear. None of the projects or transactions I have described up to this point are primarily rooted in altruistic, philanthropic or idealistic intent. These are all core banking activities, conducted on behalf of Citi clients.
And yes, they all add to our bottom line.
However, their value and benefits accrue to many stakeholders, including our communities, our society and the broader U.S. and global economy.
In addition to our core activities as a bank, we also advance our economy and society by supporting nonprofit organizations that tackle such challenges head-on.
We have focused on the need to close the widening gap between the skills young people have, and what they need to participate in today’s workforce.
The U.S. Department of Labor released a report last fall that found that there are 7 million jobs at any one time that employers can’t fill.
Our Pathways to Progress initiative is designed to help close this job-skills mismatch by providing 200,000 young people over six years with the tools they need through training, work experience or entrepreneurial opportunities.
At $100 million, it’s the largest philanthropic commitment in our history and shows our willingness to put our profits back into the communities we serve.
Earlier this year, we broadened its scope to help 10,000 older workers, who feel as if they have been on the wrong side of globalization or digital innovation, to secure employment in growth industries like healthcare, transportation, technology and construction.
Several organizations here in Detroit are involved in this $10 million effort.
“Focus: Hope” is launching a robotics program to support people looking to build careers in automation, advanced manufacturing and information technology—fields all helping to grow our economy at home.
Beyond philanthropy, we also accept that we have a responsibility to have a point of view on certain issues affecting our colleagues and communities.
One is the epidemic of gun violence.
After several Citi colleagues were directly impacted by the Parkland massacre, we decided we needed to think about where our clients intersected with this issue.
We don’t seek to take the place of government, and we never intended to offer the perfect solution, much less a new form of gun control. I own guns for recreational purposes and believe firmly in the Second Amendment.
Our Commercial Firearms Policy simply asks our retail sector clients to use accepted best practices if they sell firearms. These include age restrictions, completed background checks, and no sale of bump stocks and high-capacity magazines.
These sales practices are followed by major retailers including Wal-Mart and Dick’s Sporting Goods and have strong public support, even among many gun owners.
We also recognize that how we operate as a company is an opportunity to demonstrate our values.
We have focused on building a better, fairer culture at Citi, making it as free of racial, gender and other biases as we can.
This year, we became the first U.S. company to disclose our unadjusted, or “raw,” gap.
Our analysis revealed our median pay for women globally is 71 percent of the median for men, showing we had significant issues with the representation of women in senior roles at our firm.
And while transparency is great, what you do with your data is where the rubber hits the road. We have set a goal to have 40 percent of our mid-and senior-level roles globally filled by females by 2021. We measure our progress towards these targets quarterly.
While I have focused on Citi, I am happy to say the way we think about these issues is increasingly reflected by our clients and the business community more broadly.
In August, The Business Roundtable, an organization of CEOs of major U.S. companies, announced that it had revised its principles of corporate governance.
Our revised statement said that responsible businesses should also take into account the interests of other stakeholders – such as colleagues, clients, suppliers and communities.
Because as the examples I’ve cited show, it is just not the case that when other stakeholders win, shareholders lose.
Business is not, and should never be, a zero-sum game.
Up until recently, business didn’t have enough credibility to take on social issues. But earlier this year, evidence emerged of a new attitude when the public affairs firm Edelman published its annual Trust Barometer.
The results revealed a profound shift in the degree of trust that people have for one class of company: their employers.
75 percent—three out of every four people interviewed globally said they trusted their employers to do “what is right for them and for society.”
That is a welcome shift in perception and a development that businesses should take pride in.
I believe if companies continue to see their role as creating value for stakeholders as well as shareholders, our country will be stronger, and our system will continue to show why it creates more opportunity than any other, anywhere.
Thank you for having me and I look forward to our discussion.