Project Details
Project
Citi Social Finance Framework Second-Party Opinion (2021)
Client
Citigroup
Project Type
Social Bond/Loan
Industry Group
Banks
Use of Proceeds
Access to essential services; Affordable housing; Affordable basic infrastructure; Health; Education; SME finance and microfinance;
Location
U.S.
Evaluation Date
Jul 2021
Evaluation Summary
Sustainalytics is of the opinion that the Citi Social Finance Framework is credible and impactful and aligns with the four core components of the Social Bond Principles 2021. This assessment is based on the following:
USE OF PROCEEDS
The eligible categories for the use of proceeds are aligned with those recognized by the Social Bond Principles. Sustainalytics considers that the eligible categories will lead to positive social impacts and advance the UN Sustainable Development Goals, specifically SDG 1, 2, 3, 4, 6, 7, 9, and 11.
PROJECT EVALUATION / SELECTION
Citigroup’s internal process in evaluating and selecting projects is managed by its Social Finance Team (SFT). The SFT will identify a unique Social Finance Asset Portfolio based on the Framework’s eligibility criteria and exclusionary criteria. Citigroup has assured to Sustainalytics that the SFT validates due diligence on potential loan recipient companies to ensure that the companies will use the financed loans to carry out activities aligned with the Framework’s eligibility and targeting criteria. Sustainalytics considers the project selection process in line with market practice.
MANAGEMENT OF PROCEEDS
Citigroup’s process for management of proceeds is overseen by the Sustainable Bond Working Group (SBWG), which is co-chaired by Citigroup’s Chief Sustainability Officer and Head of Capital Markets, Treasury. Citigroup will use an internal asset management system to track allocation of an amount equivalent to the net bond proceeds using a portfolio approach. Unallocated proceeds will be temporarily held in cash, cash equivalents and/or other liquid marketable instruments (including U.S. Treasury securities). Citigroup will strive to immediately allocate an amount equivalent to the net bond proceeds to a pool of existing assets. This is in line with market practice.
REPORTING
Citigroup intends to report on allocation of proceeds on its website on an annual basis until full allocation. The allocation reporting will include details such as allocated amounts, the share of financing vs. refinancing and total amount of unallocated bond proceeds. In addition, Citigroup Inc. is committed to reporting on relevant impact metrics. Sustainalytics views Citigroup Inc.’s allocation and impact reporting as aligned with market practice.