Sustainability and Innovation at CitiBaruch CollegeApril 1, 2008

Val SmithVice PresidentEnvironmental Affairs

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Agenda

I. Citi Snapshot

II. Environmental and Social Risk Management

–Case Study: The Equator Principles

III. Climate Change Strategies

–Case Study: The Carbon Principles

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I. Citi Snapshot

• Founded in 1812, 400,000 employees, 200 million customer accounts, 100+ countries

• 14,500 properties, 94 million square feet

• 4 business units:

– Global Cards

– Consumer Banking

– Institutional Clients Group

– Global Wealth Management

Corporate Environmental Affairs works across business units to:

• Develop sustainability strategies• Support and advise the business units on sustainability initiatives• Engage with stakeholder groups

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II. Environmental and Social Risk Management

We know that environmental and social risk can translate to financial risk …

An Economic Boon In Uruguay Becomes A Bane to Argentina

In Climate Controversy,Industry Cedes Ground

Ecuador: Soldiers Clash with Oil Protesters

News – England - Protest over cement factory plans

Stones Kill 4 Indonesian Officials in U.S. Mine Protest

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II. The Equator Principles

• The Equator Principles apply to project finance and are based on the World Bank and IFC Performance Standards and Environmental Health and Safety standards

• Citi was a developer and founding adopter, and led the revision of the Principles in July 2006

• A total of 60 financial institutions are signatories, representing approximately 88% of all project finance

• Citi expanded the Equator Principles into a broad Environmental and Social Risk Management Policy, which we apply to a wide range of transactions where we know the use of proceeds.

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II. Equator Principles Case Study

• Large infrastructure project in India

• Client approached Citi to act as the sole arranger for the project, in part because of our expertise on environmental and social risk

• Project involved land acquisition and resettlement of people, including vulnerable groups such as scheduled tribes and castes, and female-headed households

• We recommended an independent expert on Indian resettlement to help advise

• Citi worked with the client and the independent expert to develop a comprehensive plan for the project to comply with the Equator Principles.

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III. Climate Change Strategies

Feb 2007: Position Statement on Climate Change

• Called on U.S. Congress to create a market-based national policy to reduce greenhouse gas emissions

• U.S. Policy should:

– Recognize early actors

– Leverage market forces to establish price signals for GHGs

– Reward energy efficiency and emissions avoidance, encourage low-GHG technology R&D

– Ultimately fit into a global international framework

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III. Climate Change Strategies

May 2007: $50 billion climate announcement– Demonstrates scale and breadth of client activities

– Represents Citi positioning to provide climate expertise and solutions

– Includes targets for all primary business units

– Includes $10 billion target for reducing our operational footprint

NEW YORK, May 8 (Reuters) - Citigroup Inc. (C.N: Quote, Profile , Research), the largest U.S. bank, said on Tuesday it plans to commit $50 billion to environmental projects over the next decade, the biggest commitment from Wall Street to address climate change.

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III. Climate Change Strategies

$50 Billion Announcement – some examples• Comverge IPO

– Wireless metering

• US Green Bonds

– Destiny USA (Syracuse, NY)

– 100% renewable

• Client advisory

– Exposure/mitigation analysis

• Sustainable Development Investing (private equity)

– Solarfun solar (China)

– SCC Sindicatum

• Investment Research Reports

– Approximately 300 climate-related reports in 2007

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III. Case Study: The Carbon Principles

Feb 2008: Carbon Principles are announced

– Enhanced due diligence framework for power financing

– Developed by Citi, JP Morgan Chase, and Morgan Stanley

– Purpose is to manage climate change risk in electric power finance in the U.S.

– Advisors included environmental groups and power companies – Environmental Defense Fund, Natural Resources Defense Council, AEP, CMS Energy, DTE Energy, NRG, PSEG, Sempra and Southern Co.

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III. Case Study: The Carbon Principles

• Growing climate change and CO2 concerns

• Federal and state confused policy landscape results in conflict at the project level

• Banks held accountable for financing emissions

• Need for enhanced process (due diligence) to evaluate new financings

• Need for credible response to growing public and environmental concerns

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III. Case Study: The Carbon Principles

• Energy Efficiency – encourage clients to invest in demand reduction

• Renewable and low-carbon energy technologies – encourage clients to invest in cost-effective renewables, fuel cells and other low-carbon technologies

• Conventional generation – the enhanced diligence process will assess and reflect the risks in the financing considerations for fossil fuel generation

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III. Climate Change Strategies

Stakeholder engagement and partnerships are key to our sustainability strategy

Pew Center on Climate Business Environmental Leadership Council (BELC): The BELC is now the largest U.S.-based association of corporations focused on addressing the challenges of climate change.

Clinton Climate Initiative: Citi is one of six financial institutions that has committed to arrange US $1 billion to help large cities around the world undertake energy efficiency retrofits of their buildings.

Columbia University's Global Roundtable on Climate Change (GROCC): Citi signed a joint statement calling for global action on climate change in February 2007.

World Resources Institute: Citi is a member of the Climate Northeast project, and has worked with researchers at WRI to produce investment research reports

Citi Foundation Grants: In 2006 Citi provided $1.5 million in climate-related grants. Partners include Rainforest Alliance, E+Co., and World Resources Institute.

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Questions?

Val SmithVP, Citi Environmental Affairs

val.smith@citi.com