Carbon Principles

Citi was one of the original institutions that spearheaded development of The Carbon Principles, climate change guidelines for advisors and lenders to power companies in the United States. These Principles were the result of a nine-month intensive effort to create an approach to evaluating and addressing carbon risks in the financing of coal-fired power projects. The need for these Principles is driven by the risks faced by the power industry as utilities, independent producers, regulators, lenders and investors deal with the uncertainties around regional and national climate change policy. The full text, and a list of financial institution signatories, of the Carbon Principles can be found at www.carbonprinciples.com.

Citi, and the other original founders, consulted closely with clients, and environmental stakeholders in developing these Principles. The consortium developed an Enhanced Diligence framework to help lenders better understand and evaluate the potential carbon risks associated with US-based coal plant investments.

The Principles recognize the benefits of a portfolio approach to meeting the power needs of consumers, without prescribing how power companies should act to meet these needs. However, if high carbon dioxide-emitting technologies are selected by power companies, the signatory banks have agreed to follow the Enhanced Diligence process and factor these risks and potential mitigants into the final financing decision.

For Citi's reporting on implementation of the Carbon Principles, please see the Environmental section of our annual Citi Citizenship Report.