Citigroup to Deny Financing for Rainforest Logging in Agreement

January 22, 2004

(Bloomberg) -- Citigroup Inc., the world's largest financial company, said it won't finance logging in tropical rainforests, agreeing to a request first made almost four years ago by an environmental group.

Citigroup and the Rainforest Action Network said in a joint announcement that the agreement is the first of its kind in the financial services industry. The logging pact is among several new Citigroup policies that aim to protect endangered ecosystems. ``We met with Citigroup Chairman Sanford Weill last April and he initially said `this isn't our issue and you've got the wrong folks,''' said Ilyse Hogue, director of the San Francisco-based group's global finance campaign. ``Later, we convinced him that the company was accountable and he has aggressively pursued solutions, setting the tone for the rest of the financial services sector.''

Last April, the group urged people to protest by not using credit cards issued by Citigroup, the world's largest card issuer, creating advertisements that featured Susan Sarandon, Ali MacGraw and Edward Asner. Weill started talks with the group, which said it first made its request in April of 2000, on April 16, hours after the company's annual shareholder meeting. ``We aspire to operate according to the highest standards in every arena in which we do business, and the environment is no exception,'' Citigroup Chief Executive Officer Charles Prince said in today's statement. Prince became CEO on Oct. 1, replacing Weill, who remains chairman.

J.P. Morgan Citigroup spokeswoman Christina Pretto didn't return calls seeking comment on the statement. In 2001 and 2002, Citigroup led financing for coal, oil, gas, pipeline and power companies, with an 18 percent share and $169 billion in loans, bonds and preferred stock sales, according to Bloomberg data. The Rainforest Action Network said it sent letters to 10 other banks, including J.P. Morgan Chase & Co. and Bank of America Corp., asking them to ``meet or beat'' the Citigroup policies. ``All of what the network is talking about is big infrastructure finance projects, and we don't do those type of deals,'' said Bank of America spokeswoman Shirley Norton. J.P. Morgan spokesman Thomas Johnson declined to comment. Hogue praised FleetBoston Financial Corp., which she said last year helped arrange the sale of 147,500 acres of endangered rainforest to The Nature Conservancy from the bankrupt Chilean logging company Bosques SA. ``These commitments put Citigroup as the clear leader among American investment banks when it comes to environmental policies,'' Friends of the Earth's Michelle Chan-Fishel said in a statement. ``But we are holding our applause until we see how their policies translate into practice.''

--Eric Moskowitz in the New York newsroom (212) 318-2439 or EMoskowitz@Bloomberg.net.

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