Free Enterprise Action Fund
Home About the Fund How to Invest Advocacy Request Information Contact

SEC Allows Shareholder Effort to Ask Banks About ‘Green-washing’; Citigroup and Bank of America Must Put ‘Equator Principles’ Proposal to Shareholder Vote

For more info contact: Steve Milloy, 301-258-2852,

Washington DC, March 17, 2008 - The U.S. Securities and Exchange Commission has decided that shareholders have the right to know whether Citigroup and Bank of America are engaging in “green-washing” in the context of the banks’ lending practices, the Free Enterprise Action Fund (Ticker: FEAOX), a public-traded mutual fund, announced today.

“In rejecting the banks’ efforts to block shareholder proposals from the FEAOX, the SEC decided that shareholders have the right to know whether banks are walking-the-walk or just talking-the-talk when it comes to environmental initiatives like the Equator Principles,” said Steve Milloy of Action Fund Management, investment adviser to the FEAOX. “We believe that Citigroup and Bank of America are afraid that the Equator Principles could be exposed as green-washing.”

The Equator Principles are environmental activist-approved guidelines for addressing the environmental and social issues related to the financing of major projects in developing nations. The Equator Principles have been voluntarily adopted by Citigroup, Bank of America, JPMorgan Chase & Company and a number of other non-U.S. banks.

In its Citizenship Report 2006, Citigroup disclosed that 86 financially viable transactions were subjected to review under the Equator Principles. Only 20 projects worth $34.2 billion were ultimately funded. More than 75 percent of proposed projects, perhaps worth $100 billion or more, were not funded.

“Incredibly, no one knows whether any environmental or social outcomes were improved by Citigroup’s decisions to finance the 20 projects or to not finance the other 66 projects,” said AFM’s Tom Borelli. “We’re concerned that Citigroup deprived itself and its shareholders of the benefits of all that business for no reason,” Borelli added.

“Worse, is the likelihood that projects turned down by U.S. banks are then funded by the Chinese who are not know for their environmental stewardship,” said Milloy. “The Equator Principles may actually place the environment at greater risk,” he explained.

“This issue is more important than ever since Citigroup, JPMorgan Chase and Morgan Stanley recently signed on to the so-called Carbon Principles,” noted Milloy. “Similar to the Equator Principles, the Carbon Principles seem to be a little more than a framework for refusing to finance energy projects that are deemed undesirable by environmental activist groups,” Milloy said.

“Shareholders paid Citigroup chairman Robert Rubin $17 million in 2006,” Borelli noted. “It may become awfully difficult to keep paying him and Citigroup’s other officers such large sums if the bank refuses to lend money to economically viable projects while incurring huge losses from the subprime debacle,” Borelli concluded.

By investing in the FEAOX (, individuals can participate in the global warming debate while having an opportunity to earn a financial return through ownership of a large-cap mutual fund. With a minimum investment of $2,500, individuals can join FEAOX¡¯s effort to make CEOs justify their positions on global warming. FEAOX is available exclusively through Foreside Distribution Services L.P., (applications may be obtained at, and through E*Trade Financial, Scottrade, TD Ameritrade and HSBC.

An investor should consider the fund's investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the Free Enterprise Action Fund can be found in the fund's prospectus. To obtain a prospectus, please call 1-800-766-3960 or visit Please read the prospectus carefully before investing.

Mutual fund investing involves risk, including loss of principal. The Free Enterprise Action Fund is advised by Action Fund Management, LLC, which receives a fee for its services, and is distributed by Foreside Distribution Services, L.P., which is not affiliated with Action Fund Management, LLC.


  1. See Lehman¡¯s ¡°The Business of Climate Change: Challenges and Opportunities,¡± p.6 (February 2007).
  2. See e.g., U.S. Senate Committee on Environment and Public Works, ¡°Inhofe Says NAS Report Reaffirms ¡®Hockey Stick¡¯ Is Broken¡± (June 22, 2006),
  3. Kasky v. Nike, Inc., 27 Cal.4th 939, 947, 45 P.3d 243, 248, 119 Cal.Rptr.2d 296, 302 (Cal. 2002)
Invest for Freedom
Copyright 2005 Free Enterprise Action Fund