ESG at Citi Sustainable Finance Climate Risk & Net Zero Sustainable Operations Building Equitable & Resilient Communities Talent & DEI Responsible Business Appendices Transforming Our Risk and Controls Environment Ethics and Culture at Citi Risk Management Human Rights Serving Our Customers and Clients Responsibly Responsible Sourcing Human Rights Due Diligence in Action GENERAL CORPORATE PURPOSES FINANCE ARTISANAL SMALL-SCALE MINING IN CENTRAL IN THE MINING SECTOR AND WESTERN AFRICA Along with several other banks, Citi is providing financing The mining sector in this region is prone to increased human rights risks as a for a gold-mining company in a non-OECD country. This result of informal artisanal small-scale mining (ASM) operations. This kind of financing is not tied to a specific project, but rather will be mining is typically unmechanized and often occurs without proper permits or used for general corporate purposes, including working safety standards. Because ASM is frequently performed by untrained laborers capital and operational expenditures. Understanding and in areas with high unemployment and poverty, many people are put in harm’s working to mitigate potential human rights concerns in this way even as they depend on ASM for their livelihoods. company’s operations has been an important element of • Our role: While Citi does not directly finance ASM operations, our mining our financing decision process. clients may be exposed to ASM activities on or near their mine sites. Our • Our role: The Citi ESRM team proposed including an envi- risk-screening practices help us to identify geographies that require addi- ronmental and social requirement to the loan agreement tional due diligence to identify any risks of ASM occurring on our clients’ that would provide a framework for the client to bring its mining sites, which further led us to engage with our mining clients to management systems into alignment with international understand how they protect against the risk of ASM and ensure that the standards and guide future engagements should human rights of those in local communities are being respected. opportunities for additional financing arise. • Human rights concerns: Potential risks include security, health and safety, • Human rights concerns: Potential risks identified through and child labor. due diligence included worker safety due to a lack of proper • Evolving industry good practice: We are seeing a trend among our clients personal protective equipment, unclear management toward maturing practices in this area, specifically related to community practices related to the use of hazardous chemicals, and engagement and additional oversight of ASM activities, rather than outright concerns about inadequate water management and prohibition. Many legitimate mining companies are working to formalize impacts to local waterways. previously informal, unsafe and potentially illegal ASM operations that • Due diligence and risk mitigation: In response to require- were occurring within or adjacent to their official mining concessions. This ments from the lending institutions that the company formalization will establish more oversight to protect human rights and make align with international standards as a condition for the mining activities safer. In addition, these established mining companies financing, the company agreed to hire an independent are engaging with local communities to shift reliance away from unsafe consultant to benchmark its procedures and policies ASM operations toward agricultural programs and to support educational against the International Cyanide Management Code and programs for children as an alternative to working in the mines. the Responsible Gold Mining Principles. The consultant • Due diligence: By conducting due diligence on this risk, we emphasize to our was tasked with developing a timebound action plan clients the importance of evaluating all the human rights risks within their for alignment, which will inform ongoing monitoring and own operations and encourage them to learn from evolving good industry due diligence. practice to work with local communities on safe work environments and alternative job opportunities. Citi 2022 ESG Report Page 80