Sitting
on his table is a green building proposal, Bruce Schlein, the Director of
Corporate Social Responsibility (CSR) at the Citi Group and an Adjunct
Professor at the School of Advanced International Studies (SAIS) of the John
Hopkins University, is pondering the pros and cons of the green building, weighing
the measurable and immeasurable impact of the project if it goes through.
Pros going through his minds are the energy savings,
increased employee happiness and satisfaction from working in a green building,
and better company image and branding.
Cons include but not limited to the huge initial investment,
long breakeven period, lack of disposal market if Citi wants to part with the green
building in the future.
Obviously, there are a lot of measurable impacts that can help Bruce to make his decision easier, but there are also many immeasurable factors that he needs to carefully consider. This is a typical project proposal that Citi’s CSR team receives regularly from all its global offices.
Operations
Environment Sustainability has been a very important
initiative at Citi. Operationally, it
was the first bank to announce a greenhouse gas (GHG) reduction target in 2006. In 2010, Citi announced new footprint goals
for 2015, all against a 2005 baseline of 25% GHG reduction, 40% waste
reduction, 20% water reduction, and 15% of the buildings portfolio Leadership
in Energy and Environmental Design (LEED) certified.
Environmental and
Social Risk Management (ESRM)
Citi's ESRM Policy serves as a model of non-traditional risk
management. To mitigate the risk involved
in CSR projects as part of the ESRM, Citi helped creating the Equator
Principals (EPs), the Carbon Principals (CPs), sector standards for forestry,
palm oil, nuclear, and Mountain Top Removal (MTR) coal mining.
The EPs, considered the golden rule for ESRM, are a voluntary
set of standards of credit risk management framework for determining,
assessing and managing environmental and social risk in project finance
transactions. There have been 433
transactions received ESRM review in 2011.
Citi was also one of the early developer and strong supporter
of the CPs, climate business guidelines for advisors and lenders to power and
utilities companies in the United States.
CPs are created to evaluate and address carbon risks associated with the
financing of coal-fire projects.
MTR coal mining is a surface mining method mostly used in the
Central Appalachian region of the United States. Although Citi does not finance any MTR
extraction projects directly, it does have banking relationships with clients
with MTR extraction activities.
Via Citi’s Sustainable Forestry Sector Standard, Citi
conducts risk assessment and promote sustainable initiatives on forestry
projects.
Citi Environmental
Policy Framework
With the forth mentioned operation and risk management
practices, Citi is actively developing structured solution to aggregate and
scale up energy efficiency. Citi also
coordinates Municipal Securities, Global Transaction Services, Community
Capital, Microfinance, and consumer and Commercial Banking in the area of
alternative energy.
Having established itself as a pioneer in CSR, especially in
the finance industry, Citi sets up an example for all other companies who yet
to have a strong effort in CSR. What’s
more impressive is that Citi’s strong push for CSR in the developing countries
despite the fact that it might have put itself in a cost-disadvantage position. It would be great to see other global
countries follow suit and employ a global CSR approach.
It is quite delightful to see the efforts made by such an international corporation. On one hand, Citi became a model in Corporate Social Responsibility because its awareness of its importance and high standard to itself. On the other hand, a major reason that Citi is able to make efforts in this area is its power and sufficient financial support. In fact, many leaders in corporate social responsibility are large international corporations because they have the strength to do so,and is necessary to do it due to their reputations. It reveals a fact that corporations always put profits at first, and responsibility way behind it. Only the ones who have already achieve certain financial objectives could possible consider responsibility, but never consider it together with financial gain at the same time, and that is a problem.
ReplyDeleteCSR is starting to become embedded in an increasing number of corporations and sound managers have understood the positive externalities of the discipline. The reason why Citi “pushes for CSR in the developing countries” even if it leads to “cost-disadvantage” is not pure generosity. The positive externalities of CSR also encompass human resources, risk management, brand differentiation, customer loyalty, reputation, which are hard to assess but can very easily make up for the cost-disadvantages. By improving of the understanding of these impacts, more executives will be willing to employ a global CSR approach.
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