Capitals: Financial, Social, Human, Intellectual, Manufactured and Natural
StakeholdersCLPIAICOFG
Stakeholder: Clients, Internal Public, Shareholders and Investors, Community/Society/Third Sector, Suppliers, Government (Regulatory Authorities)
Our sustainability strategy is centered on risk management and inclusive business opportunities aligned with the green economy; on reinforcing governance and ethical conduct; on generating shared value for employees, suppliers, clients and shareholders and on social and environmental investment aimed promoting the transformation of society and preserving the environment.
We recognize that the financial sector can play an important role in the transition to a low carbon economy, both by selectively channeling investments and by incorporating more rigorous risk management criteria. In this respect, we adapt our financial instruments with a view to providing funding for the green economy, as well as measuring the volumes directed to sectors aligned with this concept so that they may improve their approach to business.
It is also possible to drive social development and reduce inequality through an inclusive financial system, capable of serving the needs of everyone, regardless of their location, income and level of schooling, by means of the offer of appropriate products and services, physical and digital channels and financial education.
The movement towards integrity and ethics which has reverberated throughout Brazilian society reinforces the belief that a prosperous future will depend on increasingly robust governance practices and ethical conduct. For this reason, we invest continuously in tools to promote compliance and initiatives to raise the awareness of employees and managers.
Providing opportunities for development, good working conditions and quality relations are a priority for us. Our work force is our major asset, comprising the agents of transformation that will drive our performance in sustainability. Partnerships with suppliers have been reinforced with the aim of promoting operational efficiency and assuring the quality and innovation which permeate our value chain, driving an improved experience for the client. As such, we strive to develop strong relations based on generating shared value.
The benefits for society go beyond the positive impact on business and the economy. Through private social investment we support civil society organizations in promoting activities related to education, culture and sports, as well as preserving the environment.
Generating shared value for employees, suppliers and clients is a key component of our strategy
We believe that building a prosperous future depends on increasingly robust governance practices and ethical conduct
Sustainability-related decisions are the remit of the Sustainability Committee and are overseen by the Board of Directors. To bring both the Board of Directors and senior management closer to sustainability-related questions, our CEO will sit on the Sustainability Committee.
It should be noted that the Sustainability Commission was restructured and now has four executive members as well as the departmental directors of ten sites. This measure promotes greater interaction between the commission and the Sustainability Committee, facilitating decision making and streamlining project execution.
Selective collection and the proper disposal of waste are some of our practices
SUSTAINABILITY POLICY
Corporate Sustainability Policy contains directives aimed at promoting the future continuity of our operations and businesses through social and environmental responsibility.
The document orientates the Social and Environmental Responsibility Standard, which sets forth the main guidelines for social and environmental measures in the businesses and in relations with stakeholders, establishing lines of action, governance, roles and responsibilities.
We also have as a reference the Social and Environmental Risk Standard, which determines the scope of analysis for our exposure to social and environmental risks in loan operations and with suppliers. In 2016, this scope was expanded to take into account the assessment of real estate and private equity investment guarantees. We strive to constantly enhance this, involving relevant internal areas, as well as external specialists and suppliers. The standard is reviewed on an annual basis; all suggestions are analyzed and, when appropriate, incorporated into the analytical scope.
Among the operations subject to social and environmental risk analysis, particularly worthy of note is financing for large projects, with the application of a mechanism to identify stakeholder (NGOs, local communities and specialists) perceptions of the project to be financed and its impacts. This mechanism consists of monitoring and analyzing information in online communication channels, social media, search websites and blogs, covering data which may indicate the potential risks involved in the project and which should be incorporated into the social and environmental risk analysis. G4-14
The table below provides information on the portfolio of projects subject to social and environmental monitoring:
PORTFOLIO OF PROJECTS BEING MONITORED IN DECEMBER 2016 BY SECTOR AND REGION
North
Northeast
Southeast
South
Midwest
Total
No.
R$ millions
No.
R$ millions
No.
R$ millions
No.
R$ millions
No.
R$ millions
No.
R$ millions
Sectors
Energy
5
1,859
4
523
14
859
1
315
9
772
33
4.329
Real Estate
2
122
19
652
64
5,326
9
512
4
143
98
6.756
Infrastructure
1
20
0
0
7
3,342
0
0
0
0
8
3.362
Mining
0
0
1
100
0
0
0
0
0
0
1
100
Oil and Gas
1
3
0
0
0
0
0
0
0
0
1
3
Others
3
317
5
337
16
837
4
431
1
57
29
1.981
Totals
No. of Projects
12
29
101
14
14
170
R$ (in millions)
2,321
1,612
10,365
1,259
973
16,531
The policy and the standards constitute the framework of directives responding to the requirements set forth in Bacen Resolution No. 4,327 concerning Social and Environmental Responsibility Policy.
SUSTAINABLE DEVELOPMENT GOALS (SDG)
With the objective of promoting sustainable development by 2030 and driving the effective participation of governments, companies and society, encompassing the economic, social and environmental dimensions, the 17 goals and 169 targets established by the United Nations Organization (UNO) are aimed at reducing the growing inequalities that threaten to reverse a major part of the development achieved in recent decades and at impeding the exhaustion of natural resources and the negative impacts of environmental degradation.
Our alignment with the SDGs reinforces our concern about contributing to economic development in Brazil, boosting opportunities to generate value internally and externally through the construction of business models and the accumulation of knowledge that generate synergy and promote productive cooperation among the most diverse stakeholders.
Our activities on fronts such as micro-credit, financial education, social and environmental risk are aimed at driving social development. With a view to complying with the 2030 Agenda, we will seek to include the Sustainable Development Goals and Targets in our relevance matrix as a means of reinforcing strategy.
This question is addressed simultaneously throughout the Bank based on two perspectives:
a. Direct activities, measuring and projecting the impacts in our operational processes, working on opportunities to improve eco-efficiency indicators, including the reduction of greenhouse gases (GHG) and enhancing risk management, among others.
b. Businesses, measuring the indirect impacts of financing activities, assessing their probable effects on the supplier chain and on clients, and promoting opportunities for mitigation and adaption by means of products and services that encourage a transition to a low carbon economy.
In 2016, we launched CDC Energia Fotovoltaica, a direct consumer credit product for solar energy, developed in partnership with companies in the industry to finance renewable solar energy projects, focused particularly on distributed micro-generation.
Encouraging the harmonious co-existence between drivers, pedestrians and cyclists, Bradesco Seguros Group promotes the Conviva movement, which since 2009 has installed leisure-oriented bicycle lanes in São Paulo and Osasco, encouraging the public to ride bicycles.
Also in the insurance area, regarding the impact of climate-related disruptions, Bradesco Seguros Group created the Calamity Operation, which consists of an innovative process for identifying, analyzing and prioritizing situations arising from catastrophes, focusing efforts on assessing and processing the claims of policy holders affected by natural disasters as rapidly as possible. The purpose is to ensure the company is present when policy holders most need it.
This care for its clients was the reason Bradesco Seguros Group won the Innovation in Insurance Award in the Claims Management category. The award is granted by Efma, an international organization representing the largest banks and insurance companies in the world. The company also was recognized with the Silver Award Trophy. Furthermore, the project came in first place in the Processes category of the Innovation in Insurance Award promoted by CNseg.
GREEN ECONOMY
The banking federation FEBRABAN has been conducting studies on ways to drive the transition to a green economy in Brazil using funds intermediated by the National Financial System (SFN). Examples of these studies are: The National Financial System and the Green Economy and Green Bonds. We have participated actively in this process, contributing with the development of methodologies, the preparation of content and the gathering and analysis of information.
Studies on the National Financial System and the green economy, which started in 2014, advanced significantly in terms of measurement methods in 2015 and 2016. The objective is to ensure consistent ongoing identification of the amount of funding financial institutions are allocating to the green economy and to sectors that may potentially generate environmental impacts.
The green economy concept is aligned with the United Nations’ definition, encompassing the following sectors: renewable energy, energy efficiency, sustainable construction, sustainable transportation, sustainable tourism, water, sustainable fisheries, forestry activities, sustainable agriculture and waste. The segments with the potential to generate environmental impacts were based on resolution No. 237/97 issued by Conama, Brazil’s National Environment Council, which sets forth the activities or ventures subject to environmental licensing and which, consequently, are submitted to detailed environmental risk analysis on the part of financial institutions.
This work helps the financial institutions to identify business opportunities and to manage climate, as well as social and environmental risks. It also provides inputs for dialogue with the government aimed at encouraging the creation of public policy to drive the transition towards a green economy.
The studies on green bonds are aimed at contributing to the discussion on the opportunities for and the limitations to the development of a green bond market in Brazil, similar to those overseas, as well as providing participants and other actors with guidance on the issuance process.
We have been participating actively in discussions about the business opportunities related to this market in forums promoted by FEBRABAN, the Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável (CEBDS), Skandinaviska Enskilda Banken (SEB), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and the Climate Bonds Initiative, because we believe that this type of instrument is important for stimulating the transition to a low carbon economy. We acted as bookrunner in the July 2016 Suzano green bond offer totaling US$500 million, the second green bond issue by a Brazilian company.
WE MAINTAIN POLICIES, STANDARDS AND MANAGEMENT PRACTICES ALIGNED WITH THE UNO’S UNIVERSAL DECLARATION OF HUMAN RIGHTS
Alignment with the CDP
Signatories to the Carbon Disclosure Project (CDP) since 2006, we are part of the group of investors committed to disclosing information on climate change management and the incorporation of suitable economic mechanisms by companies and governments with the purpose of supporting decision making and protecting investments over the long term. We also assumed the role of multiplier of the Supply Chain Leadership Collaboration (SCLC) in 2008, promoting the engagement of our suppliers who have more significant emissions volumes.
Our management system includes directives that ensure compliance with the United Nations Organization’s (UNO) Universal Declaration of Human Rights, the Fundamental Rights at Work and Children’s Rights. Our internal policies, standards and practices reflect our commitment in this area.
In June 2016, based on the maturity of its management system 10 years after implementation and the realignment of organizational strategies, we decided to institute a new Corporate Social Responsibility certification.
Furthermore, in our assessment of projects classified under the Equator Principles, we take into account working conditions and impacts on communities and the environment, including workers’ rights, the rights of indigenous people and the right to health. Additionally we assess human rights questions in other operations that come under the scope of our Social and Environmental Risk standard by means of specific internal restrictions and monitoring news channels.
Eco-efficiency is integral to our strategic management, linking environmental and financial performance by means of process optimization, recycling, technological innovation and savings in the use of natural resources and materials. The objective is to reduce environmental impact and drive operational efficiency.
In a integrated manner, we consider environmental questions into our activities and, by means of the Eco-efficiency Management Program, we invest in initiatives that have specific reduction targets for energy, water and paper consumption, waste generation and greenhouse gas (GHG) emissions. An environmental management system is implanted in the Cidade de Deus, Paulista and Information Technology sites and we manage materials from all areas via the platform Online Supplies, which enables control of the flow of materials requested by all company areas, preventing wastage.
From 2010 to 2015, the first cycle of the Eco-efficiency Steering plan was sucessfully finalized, achieving all its targets. To ensure the continuity of the improvement process, a new cycle was initiated in 2016 and will extend to 2018, with absolute annual targets, using 2015 as a base year. All of the indicators are compiled and analyzed on a quarterly basis. Part of these data are used in the GHG emissions inventory, which is prepared annually in accordance with the Brazilian ABNT NBR ISO 14064-1 standard and the specifications of the Brazilian GHG Protocol program.
We were the first Brazilian bank to elaborate a greenhouse gas emissions inventory in 2006, and since then we have published this inventory annually, encompassing scope 1, 2 and 3 emissions by all the companies over which we have operational control.
The targets for water and energy are as follows
Water
Target for 2016
Realized in 2016
Target for 2017
-4.2%
-7.2%
-2.5%*
* Targets for the Eco-efficiency Master Plan (2016 – 4.2%; 2017 – 2.5% and 2018 – 2.0%).
Energy
Target for 2016
Realized in 2016
Target for 2017
-2.4%
-5.8%
-1.5%*
* Targets for the Eco-efficiency Master Plan (2016 – 2.4%; 2017 – 1.5% and 2018 – 1.3%).
The financial product and service creation and enhancement process incorporates social and environmental risk analysis and the improvement of sustainability criteria. Social and environmental risk is assessed along the same lines as other types of risk.
We receive support from external stakeholders, such as universities, research centers, non-governmental organizations (NGOs), private institutions and government agencies in the creation, development and offer of products.
We provide specific products in accordance with social and environmental criteria. The special credit lines in this area include Environmental Leasing, Gas Kit loans, Solar Heater loans, Forestry Certificate loans, Environmental Working Capital, Forestry Working Capital, and the ABC (Low Carbon Agriculture) Working Capital Program, which help reduce GHG emissions and drive the transition to a low carbon economy.
In 2016, we launched a Solar Energy credit line, developed in partnership with specialized companies in the industry. This is aimed at the Prime and Private individual and Company and Corporate segments to finance renewable photovoltaic energy projects, with a specific focus on the distributed micro-generation area.
In the investment area, Bradesco Asset Management (BRAM) offers products with a social and environmental bias, including funds such as Bradesco FIC FIA Planeta Sustentável, Bradesco Prime FIC FIA Índice de Sustentabilidade Empresarial and Bradesco FIC FIA Governança Corporativa.
In the capitalization area, there are products in which part of the funds raised are dedicated to environmental conservation, the promotion of the biological and cultural diversity of the Atlantic Rainforest biome and the Amazon biome and the recuperation and conservation of marine life. These include the Pé Quente Bradesco Amazonas Sustentável, Pé Quente Bradesco SOS Mata Atlântica and Pé Quente Bradesco Projeto Tamar. In 2016, the capitalization bonds oriented to social and environmental businesses represented 65.3% of total business volume.
The list of sustainability-oriented solutions also includes the Afinidade card which has an environmental focus. These are maintained in partnership with NGOs such as the Fundação Amazonas Sustentável (FAS) and Fundação SOS Mata Atlântica. The cards are made from post-consumer PET bottles. Other sustainable products are:
BNDES Card: aimed at micro, small and midsize companies, it enables access to BNDES funding for ISO 9000 and ISO 14000 certification. We were the first bank to issue this card.
Forest Allowance Card: used to pay the beneficiaries of the program.
Virtual Cards: eliminate the need for plastic cards.
Bonus Club Program and Membership Rewards® Program: these enable donations to partnering organizations and permit members to contribute to environmental projects.
OUR PORTFOLIO INCLUDES PRODUCTS ALIGNED WITH SOCIAL AND ENVIRONMENTAL DEVELOPMENT FOR ALL CLIENT SEGMENTS
Bradesco Asset Management (BRAM) has a clear positioning on the way climate change will impact society. The institution’s participation as vice president of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) reinforces our commitment to incorporate the issue of climate change into the world of finance.
For all the companies analyzed in corporate variable and fixed income, BRAM adopts a methodology that assesses them with respect to risks and opportunities related to climate change, verifying where these companies stand in terms of the transition to a low carbon economy.
In 2016, the subject of climate change was examined by the BRAM sustainability consulting body, which assessed the implications of diverse global initiatives, legislations and the Paris Agreement for Brazilian companies and how we are positioned in relation to these new challenges.
Given the advance of carbon pricing worldwide, the area conducted a study to see how sensitive companies are in relation to the possibility of pricing carbon in Brazil. The idea is to draft scenarios in which companies are required to help the country reach the targets it established at COP21.
Aligned with the incorporation of social and environmental questions into businesses, BRAM has the mission of providing superior and sustainable returns in managing clients’ investments. In 2016, the area had R$569.5 billion under management, of which R$86.6 billion involved the assessment of Environmental, Social and Governance (ESG) factors, representing 15.2% of total assets – a significant increase since the introduction of evaluation of ESG factors into company assessments.
It should be noted that due to the high interest rate in Brazil, investments in public securities exceed the demand for investments in companies, whether variable income or corporate fixed income. Thus considering the amount invested in companies, currently BRAM has ESG coverage for 100% of its assets.
IN 2016, WE WERE LISTED ON THE DOW JONES SUSTAINABILITY EMERGING MARKETS INDEX AND THE BM&FBOVESPA CORPORATE SUSTAINABILITY INDEX (ISE)
The area also works on engaging companies and business partners in the adoption of best practices in their areas of activity and discloses the results in the Transparency Report of the Principles of Responsible Investment (PRI), to which it is a signatory. Staff receive training on metrics and assessment methodologies to incorporate the ESG dimensions into all aspects of investment decisions.
Among the diverse products and services offered to clients is the ISE Fund, which has its benchmark the BM&FBOVESPA Corporate Sustainability Index (ISE), with investments in the shares of companies that demonstrate a concern for sustainability; governance funds comprising the shares of companies traded on the BM&FBOVESPA Differentiated Corporate Governance Index (IGC); and an SRI (Socially Responsible Investment) credit fund, the only one in the Brazilian market with this bias towards companies which demonstrate that they are better prepared to meet social and environmental challenges.
The application of the Principles of Responsible Investment, which permeates investment and relationship activities with BRAM stakeholders, has the following scope:
Integration of ESG questions into the analysis and management of assets
Engagement of the investee companies
Creation of a data bank with the ESG information on the investee companies
Training of BRAM staff in ESG questions, underscoring their importance in investment activities
Participation of BRAM in working groups and forums dedicated to the question of responsible investment
An information collection flow for reporting on progress in the application of the principles to the Bradesco organization, to PRI and to BRAM
Highlights of the targets achieved by BRAM in 2016:
Status
Theme
Goal
Progress
Target Attainment Year
2014
2015
2016
Asset
management
100% Brazilian corporate assets
analyzed for ESG aspects
100%
100%
100%
2014
100% of the variable and non-fixed income — credit analysis team was trained in incorporation of ESG aspects
100%
100%
100%
2014
Engage 100% of companies invested in ESG best practices
0,12%
11%
100%
2016
Monitor key investment strategies in relation to portfolio ESG ratings
0%
0%
100%
2016
Proxy voting
Evaluate 100% of materials of special and annual shareholders’ meetings of the companies within in our portfolios
100%
100%
100%
2014
Brokerage firms
Every two years, analyze ESG practices in 100% of due diligences carried out with the brokerage firms
0%
100%
n/a
2015
Fund of funds
Every two years, analyze ESG practices in 100% of the due diligence carried out on management houses
0%
n/a
100%
2016
Governance
Hold regular meetings of the Sustainability Commission, with internal and independent experts
100%
100%
100%
2014
Communication
Increase participation in activities related to responsible investment
0%
100%
100%
2015
Increase internal communication on BRAM initiatives on the subject
n/a
- PRI Engagement Working Group Participation
- Global PRI Steering Committee Participation
- Coordination of ESG Practices Working Group for PRI in Brazil
- BRAM was a speaker at:
• 3rd LATAM ESG held by
Apimec and EFFAS
• Capital Aberto magazine event on “IR Activity and ESG Indicators”
2015
Keep BRAM’s website updated about its initiatives on the subject
n/a
n/a
- Notes in the Bank
newsletter about initiatives
2016
Obtain market’s recognition for the initiatives in the subject
-
-
- BRAM was awarded by ALAS 20 ̶ Agenda Lideres Sustentables 20, for their work and leadership on the agenda of responsible investment:
• 1st place in the Leadership in Responsible
Investment category
• 2nd place in the Leadership in Corporate Governance category
• 3rd place in the Leadership in Research for Sustainability category
2016
BRAM reaffirms its commitment to maintaining and to expanding these initiatives, establishing and disclosing its targets for the coming years:
Status
THEME
GOAL
Target attainment year
Asset
Management
100% of Brazilian government bonds analyzed for ESG aspects
2017
Training
Train 100% of analysts and managers on responsible investment evaluation policy
2018
Train 100% of Commercial and Products teams on responsible investments
2018
SRI products
Reevaluate the SRI product grid
2018
Formalization
Review the Responsible Investment Standard and develop sector procedures
