Citigroup commended for enforcing environmental policy; U.S.–based bank requires Southeast Asian timber client to obtain independent, third party certification

For Immediate Release: March 3, 2005

San Francisco – Forest protection advocates, human rights activists and socially responsible investors (SRI) today commended Citigroup (NYSE: C) for its proactive constructive engagement to help end endangered forest destruction, rampant illegal logging and related human rights abuses in Southeast Asia.
 
During an “Environmental and Social Risk Management Briefing” at Citigroup’s New York headquarters this week, CEO Chuck Prince told stakeholders that client Rimbunan Hijau, a Malaysian logging giant with a well-documented history of human rights abuses and illegal logging activities, must comply with a set of progressive new environmental policies adopted by the bank last year. Mr. Prince affirmed that Citigroup will require Rimbunan Hijau to obtain credible, independent, third party certification for its Papua New Guinea operations and specified the Forest Stewardship Council program by name during his comments.
 
The environmental and SRI communities are awaiting formal targets and timelines from Citigroup for Rimbunan Hijau’s certification process.
 
Rainforest Action Network and Citigroup

In January 2004, Rainforest Action Network and Citigroup announced that Citigroup had adopted a comprehensive environmental policy including initiatives on endangered ecosystems, illegal logging, ecologically sustainable development and climate change.  During the implementation process, Rainforest Action Network alerted Citigroup to investigations into Rimbunan Hijau by London-based Environmental Investigations Agency, Greenpeace Australia Pacific and Dateline, Australia's longest-running international current affairs television program.

Rimbunan Hijau

A recently released report on Rimbunan Hijau prepared by the Papua New Guinea Department of Labour and Employment found widespread corruption, bribery and human rights abuses.  The investigation revealed that Rimbunan Hijau employees were treated like slaves by the company’s privately paid police squad and forced to live in appalling conditions in company-controlled logging camps.
 
A November 2004 news program entitled “Jungle Justice,” produced by Dateline for SBS-TV in Australia, exposed a culture of violence and cover-up at the heart of Rimbunan Hijau’s logging operations in Papua New Guinea.
 
A January 2004 Greenpeace report, “The Untouchables: Rimbunan Hijau’s world of forest crime and political patronage,” also documented allegations that the Malaysian cartel was trafficking unlawfully harvested rainforest timber for export to the global marketplace, destructively logging vast areas of ancient forest in defiance of national laws, local customs and the rights of resource owners, and using the protection of political elites to impoverish local people.  The report concluded that Rimbunan Hijau is “a transnational corporation that represents everything that is wrong with the way in which forest resources are being managed. Rimbunan Hijau presents the perfect test against which to judge the resolve of the international community to deal effectively with the problems of forest crime and the trade in illegal timber.”
 
Supporting statements

“I commend Citigroup CEO Charles Prince for having the courage of his convictions and demonstrating that American business can operate ethically and profitably,” said Michael Brune, executive director of Rainforest Action Network.  “It will require this type of ongoing leadership to reform rogue industrial powers like Rimbunan Hijau.”
 
“Citigroup’s aggressive constructive engagement with Rimbunan Hijau sets a precedent for changing business-as-usual to business as it should be,” said Ilyse Hogue, director of the Global Finance Campaign at Rainforest Action Network. “While Washington continues to ignore the will of its constituents on environmental issues, Citigroup is evidence that good leaders on Wall Street are recognizing the imperative to work with civil society and confront the global humanitarian and environmental challenges before us.  Citigroup is leading the global banking sector on integrating principles of sustainability into its core business practices. This week’s announcement by Chuck Prince is further proof that well-implemented initiatives can play a role in making the lives of the struggling communities better tomorrow than they are today. The rest of Wall Street now faces a clear choice to move toward environmental and social leadership or risk losing consumer confidence.”
 
“Wall Street is outpacing Washington in the fight to end destructive forestry, and Citigroup’s engagement with Rimbunan Hijau ushers in a new of era of forest protection,” said Brant Olson, director of the Old Growth Campaign at Rainforest Action Network.  “Citigroup’s response to increasing consumer demand for independently certified wood products is a model that should be applied throughout Southeast Asia, South America, Central Africa and everywhere their endangered forests and communities are under threat from corrupt corporate cartels.”
 
"Over the past five years, a coalition of socially responsible investors has talked with Citigroup about reducing business risks by considering impacts to ecosystems and local communities affected by its financing decisions,” said Steve Lippman, senior social research analyst at Trillium Asset Management.  “We've welcomed Citigroup's increasing leadership in developing policies to address these risks. Citigroup CEO Chuck Prince's announcement this week that the bank is persuading Rimbunan Hijau to improve its logging practices in Southeast Asia is a tangible demonstration that these policies can make a real difference and can help protect endangered regions and long-term shareholder value at the same time. We expect this kind of proactive engagement to become the norm over time in the banking industry and challenge other financial institutions to follow Citigroup's positive lead."
 
"This is a big boost for our on-going campaign to improve the quality of forest management in Papua New Guinea and to stop illegal and unsustainable logging", said Kenn Mondiai, chair of the Papua New Guinea Eco-Forestry Forum.  "We are heartened to see that the plight of our forests and its people is of concern to the international community as only through global action will we see real reform.  The Forum also thanks Rainforest Action Network for its role in bringing the crisis in Papua New Guinea to the attention of Citibank in the United States.”
 
"We are very pleased that the world of finance is waking up to illegal and destructive logging," said Dorothy Tekwie, a forest campaigner with Greenpeace Australia Pacific. "Papua New Guinea's rainforests may be remote but news of Rimbunan Hijau's illegal and destructive logging of them has reached the boardrooms of corporate USA.  The people and forests of Papua New Guinea who are suffering from the onslaught of Rimbunan Hijau logging will take heart from Citibank's demands on Rimbunan Hijau to shape up.  By demanding Rimbunan Hijau obtain Forest Stewardship Council certification, Citibank is helping to ensure that Rimbunan Hijau operate legally, respecting the rights of the indigenous landowners, manage and protect the biodiversity of endangered forest ecosystems, and meet international standards for worker rights, health and safety."