TCS Daily

Sleeping with the Enemy

By Fraser Seitel - February 18, 2004 12:00 AM

"Pick the target, freeze it, personalize it, and polarize it."

-- Saul Alinsky, Rules for Radicals, 1989

The late and legendary community activist must have been giddy in his grave the other day, when the world's largest lending institution, Citigroup, announced a broad reaching agreement with its arch nemesis, the Rainforest Action Network (RAN), to apply a "comprehensive environmental policy" in all of its operations.

The policy, which sets standards related to endangered ecosystems, illegal logging, ecologically sustainable development and climate change, was framed in an atmosphere of civility, constructiveness, and cooperation -- and, not coincidentally, after the bank had endured four punishing years of, among other niceties:

· RAN activists chaining themselves to Citibank doors and using concrete barrels to blockade branches,

· RAN protesters heckling CEO Sandy Weill at speeches and distributing "Wanted" posters with his picture to grocery stores and neighbors in Weill's Greenwich, CT hometown,

· RAN full page ads accusing Citibank of environmental destruction and exhorting Citi customers to cut up their credit cards, and

· RAN rabble rousers "crashing" a Citigroup-sponsored community parade in Hartford, CT.

And so in the face of such incessant intimidation, Citigroup caved.

Rather than continuing to absorb the increasingly distasteful attacks of its anti-capitalist, pro-statist adversary and stand its ground on the bases of principle and compromise -- Citi threw in the towel and capitulated.

And while all was sweetness and light at the recent press conference announcing the historic enviro coupling, if history is any guide, the bank better gird itself for the ugliness that inevitably comes next.

More, More, More

For as any self-respecting activist will readily acknowledge when asked what he really wants, the answer is always the same one word, "more." Citi has already gotten a whiff of this from its new RAN allies.

Last April, the company reached what it thought was a compromise solution with RAN, agreeing to move toward a more constructive environmental policy in exchange for a cessation in hostilities from the environmentalists.

Citi followed this "good faith" agreement by pushing for the adoption of the "Equator Principles," a World Bank-sponsored pact signed last June by Citigroup and nine other financial institutions that pledged to keep loans for development projects, such as dams and pipelines, from hurting people and the environment in poor countries.

In subsequent months, nine other leading banks have signed on to the "Equator Principles." Despite the fact that Citi remains the only American bank to adopt the principles, the Rainforest Action Network demanded "more."

And now Citigroup has committed to a policy that further restricts the projects for which it can lend and the clients with whom it can deal. And because there is no enforcement mechanism in the new Citi policy, the bank is certain to incur the wrath of RAN as it attempts to tip toe past environmental land mines.

For example, the new policy states that, "Citigroup will carefully evaluate requests for project finance loans where the borrower's proposed use of proceeds would directly fund activities that Citigroup determines could adversely impact a critical natural habitat."

But what happens when the Citigroup interpretation of what constitutes "adversely impacting a critical natural habitat" differs from the RAN interpretation? Will the bank back down? Will it allow an outside group of agitators to overrule internal lending decisions?

And what about other similarly "well-meaning" advocacy groups that approach Citigroup to adopt their own chosen policies of societal improvement? Will Citi continue to accommodate any and all comers? Or will it draw the line? And if it draws the line, how will it justify accepting one activist group over another?

Slippery Slopes

Citi need only consult contemporary corporate activist history to understand the slippery slope it has created for itself in acquiescing to the radicals' demands.

· In 1993, after a similar non-stop campaign of protest and hounding from activist Bruce Marks and his Union Neighborhood Assistance Corporation (UNAC), Boston's Fleet Financial Corp. tried to "buy" Marks' silence by anteing up $140 million for low and moderate income home buyers and making Marks and UNAC the administrator of the program.

Seven years later, when Fleet announced plans to acquire New Jersey's Summit Bancorp, Marks showed his gratitude by once again waging war, castigating Fleet as "the Evil Empire expanding its predatory practices."

So much for buying silence.

· In 2000, new Ford Motor Company CEO William C. Ford, Jr. became a hero to the Sierra Club and a "Bolshevik" to his competitors, by publishing the first car company annual corporate citizenship report, in which Ford set ambitious goals for reducing fuel emissions from smog-inducing, sport utility vehicles.

Two years later, with Ford confronted by price-cutting competition from foreign imports and staggering losses, the company drastically scaled back its environmental promises.

"Difficult business conditions make it harder to achieve the goals we set for ourselves in many areas," apologized the CEO in that year's corporate citizenship report.

Responded the executive director of Ford's old friend the Sierra Club, "This report takes a giant step in the wrong direction for Ford Motor Company, for American consumers, and for the environment....It moves the ball backwards and raises troubling questions about Ford's commitment to improving its environmental performance."

So much for understanding.

So RAN celebrated its seminal Citigroup agreement in a full page ad with a picture of the globe and a gracious and magnanimous headline that hailed its new ecological partner.

"Thank you Citigroup for an environmental policy that helps protect our most valuable asset."

Over on the RAN website, however, the headline was a bit more succinct and a lot more revealing. It read, simply:

Citigroup Victory!

Fraser P. Seitel, managing partner of Emerald Partners communications consultancy, is author of The Practice of Public Relations, now in its ninth edition. He last wrote for TCS about President Bush and Tim Russert.


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