Managing the environmental and social risks associated with client transactions is an important component of how we do business. Citi has a long history of co-founding and adopting industry-leading initiatives that have fundamentally changed the way financial institutions approach environmental and social risk, and we adhere to internationally-recognized environmental and social principles and frameworks. We continue to monitor for new, emerging risks and update our policies based on the changing risk landscape.
Our framework helps us identify potential risks within the billions of dollars in global transactions we facilitate worldwide, and effectively assess and manage the environmental and social risks associated with financing client activities in sectors with sensitive environmental and social impacts.
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:
Furthermore, please refer to the ESRM sector-specific requirements and Areas of High Caution for additional project-related requirements.
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/or 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.
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.
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 United Nations Universal Declaration of Human Rights and the International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work (including the eight core conventions). Citi is also a signatory to the United Nations (UN) Global Compact. Citi seeks to integrate the corporate responsibility to respect human rights articulated in the United Nations Guiding Principles on Business and Human Rights and corresponding expectations in the OECD Guidelines on Multinational Enterprises and in 2016, became the first U.S. bank to report on human rights based on the Guiding Principles Reporting Framework (see Reporting Index in annual ESG Report). Our support for these fundamental principles is reflected in our policies and actions toward our employees, suppliers, clients and the countries where we do business, as further discussed in our Statement on Human Rights.
Across our operations, in our supply chain and in our lending activities, we seek to avoid the risk of being linked through our business relationships to any form of modern slavery, including forced labor or human trafficking. As an employer, we have instituted the policies reflected in our Code of Conduct to promote the respectful treatment of our employees. Citi’s Requirements for Suppliers and Statement of Supplier Principles communicate to our suppliers our expectation that they have policies addressing practices constituting forced labor and child labor.
Beyond our own operations and supply chain, we evaluate clients for risks related to modern slavery through our Global Anti-Money Laundering Program and Know Your Customer protocols. These protocols designate human trafficking as among the most severe types of risks for financial crimes due to the risks of traffickers laundering their illicit proceeds via our financial products, services, or those of our correspondent banking relationships. We also deploy advanced data analytics through our Far From Home program to flag flows of funds that present a high risk of being related to human trafficking, so that we can raise these concerns to the proper law enforcement authorities and try to prevent further illicit activity from occurring. In addition, some sectors we finance or procure from can, in certain geographies, be associated with a high prevalence of risk indicators of human trafficking or forced labor. Citi will not provide financing when our due diligence indicates that the client is actively using forced labor or harmful or exploitative forms of child labor in their own operations, or if the relevant labor forces are at risk of being subjected to human trafficking. Citi publishes an Annual Statement on its efforts to combat modern slavery in compliance with the UK Modern Slavery Act (2015) that is approved by the boards of directors of all relevant Citi UK entities. Similarly, Citi Australia publishes an Annual Statement on its efforts to combat modern slavery in compliance with the Australian Modern Slavery Act of 2018 that is approved by the boards of directors of all relevant Citi Australia entities.
