At CitiGroup: Voting "Yes" on Both Climate Action and More Coal

It's a coincidence that this Tuesday both the registered Democrats of Pennsylvania and CitiGroup's shareholders will be casting their votes. In Pennsylvania, it's a choice between Obama and Clinton, and at Citi there's a proxy statement full of issues -- but in both cases the troubling face of climate and coal is on view.

With 47,000 coal workers in Pennsylvania and West Virginia -- critical states for both nomination and election -- Obama and Clinton have been campaigning along a tight rope suspended between the opposite poles of a glaring contradiction: promising strong climate action and a bright future for coal.

Citi's shareholders face a choice laden with a similar contradiction. They have a stake in a bank that has promised vigorous action on climate change, yet financing coal is an important source of profits. In fact, Citi is one of the leading financiers of mountaintop removal mining (MTR).

Now shareholder proposal #9 (on page 86 of the 2008 Proxy Statement available here) is asking shareholders to tell the bank to stop dirtying its hands with profits from coal:

Resolved: Shareholders request Citigroup’s board of directors amend its GHG emissions policies to cease all financing, investment and any further involvement in activities that support MTR coal mining or the construction of new coal-burning power plants that emit carbon dioxide.

Management has written a comment in vigorous opposition to the measure.

Disengagement from sectors, as the proposal recommends, and from the clients that comprise these sectors, would undermine Citi’s position, limit our ability to lead the sector, and cede control of our business and influence to competitor institutions....ceasing Citi’s involvement in coal-related ndustries would not be in the best interests of Citi’s stockholders, and adoption of this proposal could undermine Citi’s numerous initiatives.

Among the other arguments management uses is its adoption of the "Carbon Principles" for evaluating investments, and other green credentials. But a document being circulated to the media by the Rainforest Action Network (RAN) gives a detailed counterpoint to the bank's progressive claims and turns the greenwash brown.

RAN explains that the Carbon Principles are merely a process document which does "not lay out performance criteria for power companies nor lay out certain transactions that signatories will avoid." Furthermore,

Despite signing the Carbon Principles, Bank of America and Citi continue to invest in coal-fired power plants. In March 2008, just one month after the release of the Carbon Principles, both banks were part of a lending syndicate that provided $3.2 billion in financing to Duke Energy. Duke is moving forward with plans to build several controversial coal-fired power plants in North Carolina and Indiana.

Still, no one is under any illusion that the shareholder proposal #9 will win approval. There is still great tolerance for glaring contradiction -- both in Pennsylvania and in the banquet rooms of the NY Hilton where Citi will hold its Annual General Meeting -- so don't expect the political and financial climate to change much on Tuesday.

The forecast will remain troubling -- climate action with a strong likelihood of a lot more coal.

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