Citi announced it will direct $50 billion over the next 10 years to address climate change through investments, financings and related activities to support the commercialization and growth of alternative energy and clean technology among the clients and markets it serves, as well as within its own businesses and operations.
“The comprehensive program we are announcing today is not a wish-list, but a realistic, achievable plan that serves a critical global need and responds to an emerging investment opportunity,” says Charles Prince, Chairman and CEO.
Rainforest Action Network (RAN) tempered praise for the announcement by calling on Citi and its peers to stop funding new coal development and other projects that contribute to the global climate crisis. It warned that $50 billion would do little to fix the damage being done by Citi’s dirty investments.
“Fifty billion dollars to fight climate change is great, but Citi is using its left hand to clean up a mess made by the right one,” said Michael Brune, RAN executive director. We’re pleased by this announcement, but praise for Citi must be tempered by the understanding that this bank is continuing to fund some of the worst, most CO2-intensive projects in the world.”
According to data provider Thomson Financial, Citi was the top arranger of corporate financing for the power and oil and natural-gas sectors in 2006, controlling 10% of the $272 billion power-lending market and 8.7 percent of the $310 billion oil and natural-gas lending market.
More about Citi’s commitments:
Citi will increase ten-fold, to $10 billion, its commitment to reduce its corporate environmental footprint through its own real estate portfolio, procurement and energy use, as part of its pledge to reduce GHG emissions by 10% by 2011.
This ambitious undertaking across Citi’s more than 14,500 global facilities is driven by the creation of a Global Energy Council; purchase of 52,283 MWh of green power for operations; and its goal of achieving environmental certification (e.g. Leadership in Energy and Environmental Design or LEED in the U.S.) for the construction of all new office buildings and operations centers and evaluation of existing larger facilities.
In 2007, two major U.S. office facilities in Dallas and New York City are in the process of achieving LEED status, with a new office tower in Long Island City, NY, housing 1,500 employees, achieving LEED Silver rating, and a data center in Europe that is being designed to achieve LEED Gold status. Citi expects to open LEED-certified retail branches in 2008, and has already begun installation of 100% recycled materials.
Citi’s Markets & Banking group plans to invest in and finance over $31 billion in clean energy and alternative technology over the next decade through the expansion of existing activities and the launch of new client services. With committed investments and financings approaching $7.5 billion to date, the Markets & Banking group sees tremendous opportunities to support companies working in alternative energies such as solar, wind, hydro and geothermal; helping to commercialize energy efficiency ideas; and facilitating investments in aging infrastructure using clean and efficient technologies.
Citi has a growing portfolio of equity investments in renewable energy projects, including wind farms in Minnesota and New Mexico. Citi recently advised and financed the $2.15 billion acquisition of a major US wind portfolio by EDP – Energias de Portugal that plans to bring over 9,000 MW of new wind development projects to market. Citi also underwrote US Green Bonds for a green/carbon neutral real-estate development in Syracuse, NY, and will continue developing innovative financial products to support clients as they implement climate change initiatives.
Since 2006, Citi has also provided advisory services in targeted GHG-intensive sectors to help clients analyze and understand carbon exposure and reduction strategies, building on Citi’s industry leading environmental and social risk management (ESRM) capabilities.
Various businesses at Citi Alternative Investments (CAI) have been active in making environmentally friendly investments. For example, as part of the Sustainable Development Investment Program, CVC International has invested $150 million to date, including such notable transactions as Suzlon Wind Energy, a wind turbine manufacturer based in India, and Sindicatum Carbon Capital, a developer of projects that reduce GHG emissions globally. Citi Property Investors (CPI) invests in sustainable building projects. Its first such investment was in the Loreto Bay Company, a 5,000-home community in Baja California, Mexico that is one of the largest sustainable resort communities in North America.
In April 2007, CAI created a standalone investment center called Sustainable Development Investments (SDI). SDI builds on Citi’s Sustainable Development Investment Program with an expected ten-fold increase in its capital commitment to over $2 billion of private equity over the next ten years in renewable and alternative energy, clean technologies, energy efficiency, carbon credit markets, waste and water management and sustainable forestry. Similarly, CPI intends to commit $500 million to investments in sustainable building projects over the next 10 years.
Citi’s consumer franchise is offering climate friendly mortgage, card and commercial finance products to its clients. In the summer of 2006, CitiMortgage and Sharp Electronics Corporation, the world’s leading producer of solar cells and U.S. subsidiary of Sharp Corporation (Osaka, Japan), signed a joint marketing agreement that enables Sharp’s Solar Energy Solutions Group offer home equity loans and lines of credit through CitiMortgage as an additional financing option for homeowners to purchase and install solar electric systems. The home equity program offers customers an affordable alternative to make this energy-efficient upgrade to their homes.
Citi’s commercial finance and leasing division, CitiCapital, is more than doubling its commitment to facilitating the reduction of carbon-gas emissions and promoting sustainability by 2010. Its CitiCapital Energy Finance Unit has an existing portfolio of over $1 billion from underwriting energy efficiency upgrades for universities, local school districts and various municipalities in the United States, allowing clients to amortize the cost savings of improvement over a 15- to 20-year period generally without capital outlays.
In the workplace, Citi recently demonstrated its commitment to healthy work settings and environmental responsibility with its new Citi Cards facility in Elk Grove Village, Illinois, which was designed with numerous environmentally sustainable features.
In addition, Citi Community Development is building on its existing investing activities to include green-related investments, such as renewable energy tax credit investments and green private equity investments. And members of Citi’s popular “Thank you” points rewards program can redeem points for a range of environmentally responsible rewards.