Citi Breaks Energy CSR Promises

When a major corporation lays out new policies on social and environmental responsibility, it is truly time to celebrate. Corporate social responsibility policies have the potential to change market dynamics and speed up the shift to a socially responsible, low-carbon economy. Yet with every unveiling of a company’s new CSR policies comes a question: how well will the corporation involved actually stick to its own lofty goals? Inevitably there are companies that trot out great-looking policies only to backslide months or years later by engaging in practices they promised to discontinue. Unfortunately this seems to be the case with Citi’s 2009 policy on mountaintop removal coal mining.

According to the corporate watchdog group Rainforest Action Network, Citi indicated in 2009 that it would shift away from funding companies heavily engaged in mountaintop removal—a practice which involves blasting off the tops of mountains to expose underground coal seams. Yet Citi’s recent actions suggest the biggest bank in the US hasn’t really changed its ways much at all. In fact Citi helped finance the recent acquisition of mining giant Massey Energy by the energy company Alpha Natural Resources.

Massey, commonly referred to as the “poster child of mountaintop removal” is up to its neck in mountaintop removal mines that destroy natural ecosystems and poison communities in the Appalachian Mountains. The company also presided over the deaths of twenty-nine coal miners in an underground mining explosion last spring. This last event contributed to a loss of public faith in the company, the resignation of Massey CEO Don Blankenship, and the eventual selloff of Massey’s assess to Alpha Natural Resources. The dissolution of Massey, an increasingly controversial corporation, isn’t surprising in itself. But what’s startling is the acquisition by Alpha was financed by a bank that says it is getting out of the business of mountaintop removal.

It would be nice to think the departure of Massey will mean less mountaintop removal in Appalachia; unfortunately that isn’t the case. Thanks to Citi’s willingness to cough up the funds, Alpha now seems prepared to pick up where Massey left off and continue this particularly destructive form of coal mining. Since Citi is willing to go along with this, it seems the bank’s mountaintop removal policy has been proved basically meaningless. The rumblings of a public outcry are already beginning, with environmental groups calling out Citi for failing to live up to its own professed standards.

Citi, like many companies before it, has talked the talk of corporate social responsibility while failing to walk the walk. Now the bank’s public reputation will have to take the consequences. The thing about a good CSR policy is can be easy to break, but not so easy to explain to your customers why you broke it.

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