New York – After having disbanded its SRI research product almost a year and a half ago, Citi is reinforcing its corporate social responsibility approach by engaging in SRI initiatives and by strengthening the ESG research it offers to its clients. In the last few weeks, the firm has not only made an important addition to its SRI research unit, but it also became the first large US-based bank to sign the Global Compact, a United Nations corporate citizenship initiative.
In December 2008, in the midst of a stormy financial environment, several large sell-side firms slimmed down their ESG research units and restrained from joining SRI initiatives. Back then we commented in this newsletter that, given the corporate and financial environment, the conduit of ESG research through sell-side shops was likely to flow slower in the near future. We went further to predict that despite the trimming taking place in the SRI units of various sell-side firms, demand for ESG research would ensure that this kind of research continues to grow.
A year and a half later, our observation on the strong demand for ESG research seems to be accurate as Citi’s efforts to refurbish its SRI approach seem to confirm. Citi seems to be attempting to strengthen its SRI research by bringing on board Jenny Anderson who comes to the firm after working as an SRI analyst at Jupiter Asset Management. Before joining Jupiter in 2006, Ms. Anderson worked with the SRI teams at Citigroup, Henderson Global Investors, and RCM.
Furthermore, Citi’s SRI approach is revealed by its maverick move of becoming the first large US bank to join the UN Global Compact. The Global Compact is a policy initiative for companies to align their operations with ten principles related to human rights, labor, environment, and anti-corruption. Although not a legally enforceable framework, the Global Compact advocates for the corporate development, implementation and disclosure of sustainability practices.
“We are committed to making the global Compact and its principles part of the strategy and culture of our company and to engage in projects which advance the broader development goals of the United Nations.” expressed Citi’s CEO Vikram Pandit in a letter to UN Secretary General Ban Ki-Moon.
Sell-side ESG research and SRI initiatives were among the main victims of the financial crisis with entire units disbanded and significant other resources cut. However, the sky seems to be clearing up for ESG research and for SRI initiatives with Citi making significant efforts to refurbish its SRI approach.