Another interesting takeaway from the first day of the 3CS Spring Conference involved Citi’s response to a negative perception by some of its customers. Eliza Eubank, VP of Environmental and Social Risk Management for Citi, discussed how brand reputation can be a policy driver.
Citi, and other banks, had come under brand attack by consumers who were cutting up their credit cards in protest to lending practices. Consumers were reacting to media stories that highlighted banks’ practice of financing companies engaged in unsustainable activities and environmental destruction. Understandably, sustainability-minded individuals disliked the idea of their money financing activities they opposed.
At the same time, Citi could not remain competitive with other financial services firms if it stopped lending to any entity that might be viewed as unsustainable. The solution was for Citi to unite with other banks in creating The Equator Principles, a framework for financial institutions around responsible project financing. This solution allowed major banks to lend responsibly without losing market share to competitors—avoiding risk rather than growing revenue. Even though this was a response to a brand threat, it illustrates how large organizations can use their power to enhance society without sacrificing the bottom line. This was the point to prove during my speaking opportunity!