Global Citizenship Report 2017

Human Rights Due Diligence in Client Transactions Citi has thousands of corporate and institutional clients. The UN Guiding Principles acknowledge the challenges posed by having such extensive business relationships, and we have adopted the approach set out in the UN Guiding Principles of identifying general areas where the risk of adverse human rights impact is most significant from the perspective of people who could be affected. We regularly evaluate and, when needed, enhance our due diligence requirements to ensure that the clients that pose the most significant human rights risks are managing and mitigating those risks in line with international best practices. We use our ESRM Policy, where applicable, to assess and manage risks consistently and evaluate client projects and activities against a common set of environmental and social standards. In addition, for certain qualifying projects, we apply the Equator Principles (EP) to assess and manage envi- ronmental and social risks. The EP framework helps financial institutions define processes and standards for stakeholder engagement, including mechanisms for affected communities to address grievances proactively with project sponsors. Our ESRM team screens transactions covered by our ESRM Policy during the initial marketing phase to identify any client activities we believe pose heightened risks to workers and local communities. Our policy prohibits financing any clients or projects involved in forced labor, child labor or human trafficking. In addition, the policy covers Areas of High Caution — heightened environmental and social risks that require closer due diligence and heightened risk management. These areas overlap with our most salient human rights risks and include the following: • Indigenous Peoples : Various concerns arise around the extent to which indigenous communities have been con- sulted during project development and have consented to impacts to their land, livelihoods and cultural heritage. • Labor : There are risks related to labor forces used in the construction of projects or other operations, including risks associated with forced labor, child labor and human traffick- ing by project operators and their subcontractors. • Resettlement : Resettlement of local communities, including indigenous groups, can be necessary for project implemen- tation. When this occurs, it should be conducted through carefully designed resettlement action plans that are reviewed by project lenders in advance of implementation and should, where necessary, include efforts toward achieving the free, prior and informed consent of indigenous communities. • Security : Security concerns have been identified relating to how project sponsors engage with public or private security forces protecting project sites. In such circumstances, if we decide to proceed with financing, we will advise project sponsors on the implementation of international standards, such as those in the Voluntary Principles on Security and Human Rights. If during our initial screening or more extensive due diligence for a transaction we find there is a risk of adverse impacts, we carefully evaluate the client’s current commitment and capacity to avoid, mitigate and/or manage those impacts in accordance with international industry best practices and their willingness to engage in continual learning and improvement. We escalate the most challenging cases with the potential for severe adverse impacts to senior business and risk managers for collective discussion on the risks and the client’s commit- ment and capacity. In some cases, senior management will conclude that the likelihood for adverse impacts is too great — posing an imminent threat to people or communities — and we will decline involvement in the transaction. After the financial close of project-related transactions that have time-bound environmental and social action plans, we monitor the project sponsor’s implementation of those actions through the construction and operation phases of the project — often through the retention of an independent environmental and social risk consultant who periodically reports to lenders following on-the-ground audits. For more information, see the Environmental and Social Risk Management section. Citi 2017 Global Citizenship Report 49 CONTENTS    INTRODUCTION    HOW WE DO BUSINESS     SOLUTIONS FOR IMPACT    APPENDICES Conduct and Culture    Digital Innovation    Talent and Diversity    Human Rights     Environmental and Social Risk Management    Operations and Supply Chain