Indicators

Banrisul operates in the public and private sectors. The Bank and its affiliates currently have several types of suppliers: lawyers; consultants; system analysts; sellers of perishable and non-perishable goods; international IT companies; armored truck companies; and numerous other service providers.

The number of direct suppliers, in 2022, is estimated at 1,093. The Bank hires suppliers to provide services and products unrelated to its core activity, i.e., they provide supporting services  and products, including security, cleaning, transportation of valuables, acquisition of IT systems, telephone and internet services, acquisition of furniture, building rental, acquisition of sundry items.

Banrisul acts as a financial agent for customers, from industry, agriculture, transport, service, trade and health sectors. Most of them are located in Brazil’s South region.

The ratio of the annual total compensation for the organization’s highest-paid individual to the median  annual total compensation for all employees is 12.0%, while the ratio of the percentage increase in the annual total compensation for the organization’s highest-paid individual to the median percentage increase in the annual total compensation for all employees is 0.8%.

Annual salary increases occur in April (regulatory promotions retroactive to January) and in September (collective bargaining agreement).

For calculation purposes, the CEO, who is not a Bank employee, was considered as the highest-paid individual. The other workers who are not employees were not considered in the calculation. The total compensation (salaries, bonuses, job commission, full performance bonus, annual bonus, overtime, singing bonus, relocation bonus, management, retirement bonus, and retirement incentive) was considered in calculating compensation.

  Stakeholder categories with whom Banrisul engages are:

• Employees;
• Shareholders/investors;
• Market analysts;
• Customers;
• Suppliers;
• Government;
• Unions;
• Executive Board;
• Board of Directors;
• Social, Environmental and Climate Responsibility Committee – CRSAC.

The Institution has identified the need to create a stakeholder engagement program to strengthen its relationship with these groups and provide greater business opportunities and chances to listen to them. The goal is that this program enables the Institution to explore relationship channels with several groups.

For preparing its materiality, Banrisul surveyed all its target audiences, creating an opportunity to get to know their interests.

The Chair of the Board of Directors is not the Company’s CEO.

100% of employees are covered by collective bargaining agreements.

In compliance with Law 13,303/16, every year, elected Management members attend specific training on corporate and capital market legislation, disclosure of information, internal controls, code of conduct, Law 12,846, of August 1, 2013 (Anti-Corruption Law) and other topics related to the activities of a publicly held company or government-controlled company. In 2022, ESG was included in the list of topics. Additionally, Management members may participate in other courses/events with themes pertinent to their responsibilities in the respective governance bodies, if said theme is interesting for the Company.

Suspicions or evidence of non-compliance with Banrisul’s Code of Ethics and Conduct, policies, standards and institutional regulations in force should be reported through the Whistleblowing Channel, which allows the anonymous reporting of the misconduct, ensuring the right to confidentiality and protection against retaliation. The internal and external channels are available, respectively, on the Corporate Intranet and on Banrisul’s website (www.banrisul.com.br) and are intended for receiving misconduct reposts and complaints from employees and other stakeholders. The Control and Compliance Department is the independent area responsible for managing this channel.

Every six months the Board of Directors reviews a report on Banrisul’s Whistleblowing Channel. In compliance with article 3, paragraph 2, of CMN Resolution 4,859/2020, the Control and Compliance Department prepares a report with the following minimum information:

I – the number of reports received;
II – the nature of the reports;
III – the departments responsible for handling the situation;
IV – the average response time; and
V – the measures adopted by the Institution.

Banco do Estado do Rio Grande do Sul (Banrisul) is a government-controlled corporation. Banrisul’s General Management, its administrative headquarters, is located in the city of Porto Alegre, Rio Grande do Sul state.

In 2022, there were 1,085 significant instances of non-compliance with laws and regulations, of which only one incurred in fine (one instance of irregular waste disposal). 720 Municipal Tax Unit (UFM, in Portuguese) (R$3,554.06) repaid by the outsourced cleaning company (as set forth in the contract) and other non-monetary penalties. Out of the 1,084 administrative or judicial proceedings that did not incur in fines, 1,082 are social in scope: six are events related to accessibility, 20 to over-indebtedness, one to customer moral harassment, 1,055 are labor complaint events (according to CMN Resolution 4,943/21), one environmental event (disposal of recyclable waste in an organic waste container), one climate-related event (collection lawsuit to recover the amounts from the plaintiff’s property insurance policy, affected by a storm).

Additionally, Banrisul received 262 notifications in this reporting cycle, 45 of which were fines for instances of non-compliance with laws, and all of these were paid during previous reporting periods.

Banrisul’s Board of Directors identifies and manages conflicts of interest based on, but not limited to, applicable legal standards provided for in Article 156 of the Brazilian Corporate Law and article 25 of its Bylaws. Furthermore, the Code of Ethics and Conduct is widely disseminated to management members, board members, employees, interns, members of the Banrisul Group, business partners, suppliers and service providers. In the event of a potential conflict of interest, members of the Board of Directors, the Audit Committee and the Ethics Committee must abstain from resolving on matters in which this conflict is identified. Another important document governing this topic is the Related-Party Transactions Policy that outlines the conditions credit transactions and other related-party transactions.

The item “SUBORDINATION, SERVICE OR CONTROL RELATIONSHIPS BETWEEN THE ISSUER’S MANAGEMENT AND ITS SUBSIDIARIES, AFFLIATES AND OTHERS” of the Company’s Reference Form informs the interest held by Banrisul management in management of other companies in the Banrisul Group. The only controlling shareholder is the State of Rio Grande do Sul.

Related-party transactions, as well as measures taken by Banrisul, can be found in Note 29, pages 118 and 119, to the 2022 Financial Statements, available here.

The Control and Risk Executive Office is responsible for managing the Institutions’ corporate risks.

As regards Integrated Capital and Corporate Risk Management, the Chief Risk Officer (CRO) is responsible for the Corporate Risk Management Department and his/her duties include ensuring that the risk process monitors, controls, evaluates and plans capital need and goals and identifies, measures, monitors, reports, controls and mitigates credit, market, IRRBB, liquidity, operational, social, environmental and climate risks associated with the Prudential Conglomerate, communicating said risks to the Risk Committee, the CEO, the Board of Directors and regulatory agencies.

The Corporate Risk Executive Superintendent reports to the CRO on the Institution’s risk management. At least every year, risk management reports are submitted to the Board of Directors for consideration.

The credit policies definitions are available in internal regulations and are also parameterized in the “Customer Registration”, “Negative Incidents” and “Risk Calculation” systems. The Bank currently checks with external agencies whether the customer, either an individual or a company, has been listed as an “Employer that uses Forced Labor” or as causing “Environmental Damage” (conviction for environmental damage in actions filed by Brazil’s environmental protection agency (IBAMA, in Portuguese)).

Customers identified as “Employer of Forced Labor” are prevented from contracting any type of credit operations. We also monitor customers who already have a relationship with us and who may be included in those lists, taking specific actions to discontinue the business relationship.

Employees, by gender¹ ²

¹Banrisul does not have temporary, non-guaranteed hours and part-time employees.

²All permanent employees are full-time employees.  

Employees, by region

¹Banrisul does not have employees in the North and Northeast regions.

Data were gathered from a proprietary system, considering total employees for the reference period.

The consolidated financial statements include the operations of Banrisul, its offices abroad, its subsidiaries (Banrisul Armazéns Gerais S.A., Banrisul S.A. Corretora de Valores Mobiliários e Câmbio, Banrisul S.A. Administradora de Consórcios, Banrisul Soluções em Pagamentos S.A., Banrisul Seguridade Participações S.A.) and investment fund quotas in which Banrisul substantially takes or incurs in risks and benefits. We explain the Banrisul Group in detail, which comprises six subsidiaries and four affiliated companies.

Performance evaluation is an essential step to assess effectiveness, contributing to enhance the Organization’s governance. The Board of Directors carries out an annual formal evaluation of the Executive Board and its Chair performance, as well as of its own performance, a process that include self-evaluation questions. The annual evaluation is carried out according to procedures previously defined by the Board of Directors and is anonymous and individual.

All answers to the evaluation questionnaires are compiled into a report, which is sent to the Eligibility and Compensation Committee for prior analysis and then presented to the Board of Directors for consideration. The body itself suggests improvements in carrying out their duties.

Banrisul is concerned about the credibility of its information disclosed to the market and submits its sustainability report to independent external limited assurance by Deloitte, which also audits the financial statements.

The assurance letter can be found in the Sustainability Report on page 119.

BOARD OF DIRECTORS

FISCAL COUNCIL

AUDIT COMMITTEE

ELIGIBILITY AND COMPENSATION COMMITTEE

RISK COMMITTEE

SOCIAL, ENVIRONMENTAL AND CLIMATE RESPONSIBILITY COMMITTEE

¹ Sworn in February 2023.

EXECUTIVE BOARD

All employees receive training on the Code of Conduct and Ethics and on Anti-Corruption. Banrisul has other institutional policies and makes a whistleblowing channel available both on the internal and external websites.

Banrisul’s Whistleblowing Channel is a communication tool that allows employees, customers, users, partners or suppliers to report possible misconduct of any nature related to the Institution’s activities that affect its reputation and violate its internal controls and Banrisul’s Compliance Program.

The Whistleblowing Channel recorded stable figures in 2018 and 2019, receiving 155 and 153 reports, respectively. In the following years, the number of reports spiked significantly to 536 in 2020 and 433 in 2021. This increase had two main reasons: first, the Institution made a channel available to external stakeholders, offering more visibility, thus increasing the number of reports; and second, the pandemic, which altered the service routine at the branches, leading Customers to use this channel to request information from the Bank.

In 2022, there was a significant reduction, only 234 contacts were made, reflecting the acculturation of the correct use of the channel.

Banrisul’ participates in Febraban’s committees and squads, in AMCHAM’s ESG Committee and the Interinstitutional Committee on Environmental Education (CIEA in Portuguese).

After the Management Proposal is published, the shareholders make nominations for the Board of Directors, which are subsequently submitted to the Chief of Staff of the Government of the State of Rio Grande do Sul for approval. If the nominations are approved, their names and information will be forwarded to the Treasury Department for the opening of an administrative proceeding via the PROA system. Upon the receipt of the Administrative Proceeding, the Eligibility and Compensation Committee analyzes the nominee, taking into consideration the eligibility requirements outlined in the Nomination and Succession Policy, which determine that the background and experience of the nominees for the Board of the Directors should be assessed, as well as their time availability to perform the duties, diversity, knowledge, experience, behavior, cultural aspects, age group, and gender. The Committee’s opinion is forwarded to the State Attorney General’s Office for a final decision about the fulfillment of the requirements and the absence of impediments. Once the nomination has been approved by the State Attorney General’s Office, the proceeding returns to the Company, so that the election can be held.

Every two years, before the Annual and Extraordinary Shareholders’ Meeting, shareholders submit their candidates for the highest governance body. The controlling shareholder makes its nominations considering the criteria set forth in the current legislation (Federal Law 13,303/16; Federal Law 6,404/46 and State Decree RS 54,110/18).

In 2022, the Nomination and Succession Policy was updated and stated that the election of Banrisul’s Board of Directors members, should include seats for Diversity groups as of 2023, as follows: I – the shareholder, or group of shareholders, with a right to nominate 25-40% of seats on Banrisul’s Board of Directors, shall be responsible for allocating at least one of the openings for members of the Diversity group; II – the shareholder, or group of shareholders, with a right to nominate for Banrisul’s Board of Directors any percentage higher than that established in item I must allocate two or more openings for members of the Diversity group; III – Grupo Banrisul must adjust the composition of the Boards of Directors, which shall respect the minimum percentage of 30% for openings aimed at the Diversity group, by 2030.

Independence criteria must also be considered, as provided for in article 22 of the Bylaws, which can be read here.

Banrisul’s current eligibility process involves several spheres (State Department of Finance, State Chief of Staff and State Attorney General’s Office, among others). This verification flow conveys security and reliability to all stakeholders.

The Institution is grounded on its values defined in its Code of Ethics as transparency, ethics, commitment, integration and efficiency, as well as in principles and guidelines, such as integrity, respect for diversity, people, appreciation of work, social and environmental responsibility, respect for competition, respect for the image and excellence in rendering services.

The commitments refer to internationally recognized intra-governmental instruments, namely the Brazilian Central Bank, Febraban, National Monetary Council, UN Global Compact Guidelines and SDG 16.

These guidelines/policies set forth responsibilities and consequences for all levels.

Banrisul manages capital and credit, market, interest rate variation risks for the instruments classified in the banking portfolio – IRRBB- in a continuous and integrated manner;  as well as liquidity, operational, social, environmental, climate and other risks considered relevant.

Social risk, defined as the possibility of the Institution incurring in losses from events related to the violation of fundamental rights and guarantees or by acts that are harmful to the common interest, is one of the relevant risks included in the Risk Management Policies.

Banrisul does not have a specific human rights policy.

Human rights are rules that recognize and protect the dignity of all human beings and govern how individual human beings live in society and among themselves, as well as their relationship with the State and the obligations that the State has in relation to them. In this regard, as a signatory to the Global Compact since 2013, Banrisul reaffirms its commitment to the well-being of its employees, as well as to seeking to ensure the rights of its customers, suppliers and all stakeholders to which it engages. The Bank manages social risk, particularly, in order to mitigate possible actions that may occur under the human rights aspect.

The stakeholder categories to whom the Organization pays special attention in this commitment are employees, customers, suppliers and vulnerable publics.

Policy commitments should be approved by the Board of Directors. These commitments apply to management members, board members, employees, interns, members of the Banrisul Group, business partners, suppliers and the Group’s service providers.

An Administrative Instruction is issued stating that all employees must sign a Compliance Agreement, which is published in the Institutional Manual (Chapter 04 of Banrisul’s Code of Ethics and Conduct).

All employees receive training on the Code of Ethics and Conduct and the  Anti-Corruption Policy. Banrisul has other institutional policies and makes a whistleblowing channel available both on the internal and external websites. The commitments of the Code of Ethics and the Anti-Corruption Policy are available to the public.

The responsibilities of the Eligibility and Compensation Committee are:

(i)  drafting the compensation policy for Management of the Bank and its subsidiaries, suggesting to the respective Boards of Directors various forms of fixed and variable compensation, in addition to benefits and special recruiting and severance programs;
(ii) proposing to the Boards of Directors of the Bank and subsidiaries the overall Management compensation amount to be submitted to the respective Shareholders’ Meetings, pursuant to Article 152, of Law 6,404, of 1976;
(iii) assessing future internal and external scenarios and their possible impacts on the Management compensation policy of the Bank and its subsidiaries;
(iv) analyzing the Management compensation policy of the Bank and its subsidiaries vis-à-vis market practices in order to identify significant discrepancies compared its peers, proposing the necessary adjustments.

As per CMN Resolution 3,921/10, the Eligibility and Compensation Committee is responsible for assisting in the process of determining compensation. The Committee is composed of three independent members, all of whom are natural persons residing in Brazil, with higher education degrees and technical skills suitable for the position they hold. The members also meet the criteria for holding positions in statutory bodies of financial and other institutions authorized to operate by the Brazilian Central Bank.  

The board   members convene in ordinary and extraordinary meetings, and their considerations are recorded in minutes. In turn, shareholders can express their opinions at the Annual/Extraordinary Shareholders Meeting.

The Board of Directors members are only entitled to fixed monthly compensation as fees, and are not entitled to variable compensation or direct and/or indirect benefits. Executive Board members are entitled to monthly compensation in the form of monthly wage plus a representation fee, the annual amount of which must not exceed the overall management compensation amount set by the Extraordinary and Annual Shareholders’ Meeting. They are also entitled to Banrisul’s Profit Sharing Program (PLR, in Portuguese), calculated in accordance with the rules established by the Board of Directors, considering the rules applicable to the payment of PLR to employees, as defined in the Banking Employees’ Collective Bargaining Agreement. In addition to the PLR, the Banrisul Conglomerate may pay variable compensation to its executive officers, provided it is included in the overall compensation approved by the Shareholders’ Meeting, observing the limits established by the legislation in force and based on criteria that may be defined by the Board of Directors.

The report is published every year and this reporting period is between January 1, 2022 and December 31, 2022.

Contact: Sustainability Corporate Department, Rua Caldas Júnior, 108, 6º andar
E-mail: Sustentabilidade@banrisul.com.br

No information has been restated in previous reporting periods.

The composition of the Board of Directors ensures a seat for common minority shareholders, preferred minority shareholders and a representative of the employees, who is chosen by internal election, according to the Board of Directors Charter. Thus, stakeholder groups are engaged in the Board of Directors meetings.

The Board of Directors is responsible for the Company’s overall direction of business, institutional guidelines and goals. As regards Integrated Capital and Corporate Risk Management, the Board is responsible for:

a) Establishing the Institution’s risk appetite levels in the Risk Appetite Statement (RAS) and reviewing them supported by the Risk Committee, the Executive Board and the Chief Risk Officer (CRO);
b) Ensuring compliance with the Institution’s policies, strategies and risk management limits;
c) Whenever necessary, authorizing exceptions to policies, procedures, limits and risk appetite levels set out in the RAS;
d) Ensuring that the Institution’s compensation structure does not encourage behaviors that are incompatible with risk appetite levels set out in the RAS;
e) Ensuring that the Institution keeps adequate and sufficient capital and liquidity levels;
f) Having a broad and integrated knowledge of risks that can hinder capital.

As for Corporate Risk Management, the Board of Directors, the Risk Committee, the CRO and the Executive Board have seral joint responsibilities, including:

a) Understanding, in a broad and integrated way, risks that can impact the Institution’s capital and liquidity;
b) Understanding the limits of information included in capital and risk management reports;
c) Ensuring that the Institution complies with the content of the RAS;
d) Understanding the limits and uncertainties related to the assessment of risk models, even when they are developed by a third party, and the methodologies used in risk management structure; and
e) Ensuring the Institution’s different levels understand and continually monitor risks.

The Board of Directors meets periodically to evaluate changes to the capital and corporate risk management policies, as well as management reports on the main risks to which the Institution is exposed. At Management level, Banrisul relies on the Corporate Risk Committee and the Control and Risk Executive Office and, statutorily, on the Statutory Risk Committee.

In compliance with CMN Resolution 4,945, of September 15, 2021, Banrisul’s Social, Environmental and Climate Responsibility Policy (PRSAC, in Portuguese) determines that it is incumbent upon the Executive Board, a governance body elected by the Board of Directors, to:

a) provide input and participate in the decision-making related to the drafting and review of the PRSAC, assisting the Board of Directors;
b) support the implementation of actions to ensure this Policy’s effectiveness;
c) monitor and evaluate implemented actions;
d) ensure that implemented actions are improved whenever possible deficiencies are identified;
e) help and encourage the adequate and reliable dissemination of mandatory information;
f) manage the PRSAC at Banrisul. The responsibilities of the Board of Directors include ensuring that the Institution complies with the PRSAC and taking measures to ensure its effectiveness.

Banrisul has a the Social, Environmental and Climate Responsibility Committee (CRSAC, in Portuguese), an advisory body to the Board of Directors, whose duties and responsibilities are to:

a) make recommendations to the Board of Directors on the drafting and review of the Social, Environmental and Climate Responsibility Policy;
b) evaluate if the actions implemented are in compliance with the Social, Environmental and Climate Responsibility Policy and, whenever necessary, make recommendations for improvement;
c) keep records of its deliberations and decisions;
d) evaluate and monitor the Bank’s sustainable performance and the effectiveness of the actions laid down in the Sustainability Plan;
e) monitor advancements in sustainability, seeking to identify opportunities and risks, in order to create value for the Bank and its stakeholders;
f) propose and follow-up the execution of initiatives that improve the Bank’s socio-environmental performance;
g) assisting the Board of Directors in incorporating sustainability into the Company’s business strategy and administrative practices and follow up its progress;
h) analyze, monitor and issue recommendations and opinions to support the Board of Directors’ decisions on policies and practices related to its field;
i) fulfil other duties determined by the Board of Directors.

The Message from the CEO can be found in the Sustainability Report on page 4.  

The number of workers who are not employees and whose work is controlled by the organization amounts to 2,204, of whom four are supernumeraries and 2,200¹ are interns.

Most common workers are interns, whose contractual relationship is established through an integration agent called Center for Company and School Integration (CIEE, in Portuguese). Interns serve bank customers, act as cashiers, provide documents to customers and perform collection activities. They also provide supporting services to the branches and other Bank departments, manage the flow of bank bags, clear documents and control documents in the archives.

The methodology and assumptions used to obtain this indicator gather data from the internal database. The significant change in the number of workers is due to the duration of the internship contract, which is up to two years.

¹ The 2022 Administration Report shows 2,293 trainees. The difference is due to the criteria used in the consultation, which also included those who left during the month. After adjustments, those who left during the month were disregarded for the purposes of the Sustainability Report.

List of material topics:

• Innovation and technology;
• Corporate governance and integrity;
• Data privacy and security;
• Sales practices and customer satisfaction;
• Sustainable products and business;
• Partner and supplier management;
• Human capital development;
• Eco-efficiency;
• Diversity and Inclusion;
• Financial inclusion and education;
• Environmental, social and climate risk strategy.

Compared to 2021, the following new topics were added to the materiality list: “Diversity and inclusion”, “Corporate governance and integrity”; “Data privacy and security”; “Partner and supplier management”, “Human capital development”, “Eco-efficiency” and “Financial inclusion and education”.

In 2022, the topics “Risk approach and opportunities related to climate change” and “Quality of customer service and services provided” were added to the “Environmental, social and climate risk strategy” and “Sales practices and customer satisfaction”, respectively. The topic “Management of risks that can significantly impact business” was also added to “Environmental, social and climate risk strategy”.

Furthermore, topics “Management of energy consumption and solid waste generation”, “Criteria for financing assignment, positive impact and delinquency”, “Social investment in the external community” and “Business expansion strategy” have been excluded in this new step.

 In 2022, Banrisul conducted a complete materiality assessment to define its material topics, which encompassed peer benchmarking, as well as analysis of the Company’s internal documents and industry literature, such as ESG ratings and standards. A list of material topics for the industry was prepared based thereon. This list was discussed and validated with important stakeholders through interviews (the CEO, Sustainability Corporate Department and Executive Board) and, then it was prioritized through an online survey with a larger stakeholder group.

At the same time, based on the analysis of internal risk documents, the Company assessed possible impacts related to each topic, which were duly classified as regards their nature and then added to the consolidated materiality results.

Results were assessed using a methodology that weighted the answers according to each stakeholder group. The results of the online survey were consolidated to the topics’ impact study to prepare the final list of material topics.

A total of 1,315 people from the following stakeholder groups participated in the online survey:

• Employees;
• Shareholders/investors (priority);
• Shareholders/investors (diversified);
• Capital markets;
• Customers;
• Main suppliers;
• Government;
• Representatives of non-profit organizations and/or social institutions;
• Specialized media outlets;
• Union representatives;
• Executive Officers;
• Board of Directors members;
• Sustainability Committee members.

Prioritization and final approval:

Sustainability Corporate Department, CEO and Administrative Executive Board. The materiality results were also presented to the Sustainability Committee, the Social, Environmental and Climate Responsibility Committee and the Executive Board.

The ratio of the annual total compensation for the organization’s highest-paid individual to the median  annual total compensation for all employees is 12.0%, while the ratio of the percentage increase in the annual total compensation for the organization’s highest-paid individual to the median percentage increase in the annual total compensation for all employees is 0.8%.

Annual salary increases occur in April (regulatory promotions retroactive to January) and in September (collective bargaining agreement).

For calculation purposes, the CEO, who is not a Bank employee, was considered as the highest-paid individual. The other workers who are not employees were not considered in the calculation. The total compensation (salaries, bonuses, job commission, full performance bonus, annual bonus, overtime, singing bonus, relocation bonus, management, retirement bonus, and retirement incentive) was considered in calculating compensation.

The Chair of the Board of Directors is not the Company’s CEO.

In compliance with Law 13,303/16, every year, elected Management members attend specific training on corporate and capital market legislation, disclosure of information, internal controls, code of conduct, Law 12,846, of August 1, 2013 (Anti-Corruption Law) and other topics related to the activities of a publicly held company or government-controlled company. In 2022, ESG was included in the list of topics. Additionally, Management members may participate in other courses/events with themes pertinent to their responsibilities in the respective governance bodies, if said theme is interesting for the Company.

The Business Partnership and Open Banking Department has been working constantly with Bem Promotora on the Prevention of Money Laundering and Terrorist Financing (PLDFT, in Portuguese). In September 2022, Banrisul published its New Policy on Prevention of Money Laundering, Terrorist Financing and the Distribution of Weapons of Mass Destruction, which is a mandatory reading for all those operating the corresponding assets. This document was read by 1,440 operators.

Suspicions or evidence of non-compliance with Banrisul’s Code of Ethics and Conduct, policies, standards and institutional regulations in force should be reported through the Whistleblowing Channel, which allows the anonymous reporting of the misconduct, ensuring the right to confidentiality and protection against retaliation. The internal and external channels are available, respectively, on the Corporate Intranet and on Banrisul’s website (www.banrisul.com.br) and are intended for receiving misconduct reposts and complaints from employees and other stakeholders. The Control and Compliance Department is the independent area responsible for managing this channel.

Every six months the Board of Directors reviews a report on Banrisul’s Whistleblowing Channel. In compliance with article 3, paragraph 2, of CMN Resolution 4,859/2020, the Control and Compliance Department prepares a report with the following minimum information:

I – the number of reports received;
II – the nature of the reports;
III – the departments responsible for handling the situation;
IV – the average response time; and
V – the measures adopted by the Institution.

Strictly speaking, the Bank did not identify incidents of corruption in the form of offering or requesting of undue advantages. Banrisul did not terminate or refuse to renew contracts due to the involvement or possible involvement of a correspondent in corruption. Neither the Organization nor its employees are parties to corruption-related lawsuits.

Banrisul’s Board of Directors identifies and manages conflicts of interest based on, but not limited to, applicable legal standards provided for in Article 156 of the Brazilian Corporate Law and article 25 of its Bylaws. Furthermore, the Code of Ethics and Conduct is widely disseminated to management members, board members, employees, interns, members of the Banrisul Group, business partners, suppliers and service providers. In the event of a potential conflict of interest, members of the Board of Directors, the Audit Committee and the Ethics Committee must abstain from resolving on matters in which this conflict is identified. Another important document governing this topic is the Related-Party Transactions Policy that outlines the conditions credit transactions and other related-party transactions.

The item “SUBORDINATION, SERVICE OR CONTROL RELATIONSHIPS BETWEEN THE ISSUER’S MANAGEMENT AND ITS SUBSIDIARIES, AFFLIATES AND OTHERS” of the Company’s Reference Form informs the interest held by Banrisul management in management of other companies in the Banrisul Group. The only controlling shareholder is the State of Rio Grande do Sul.

Related-party transactions, as well as measures taken by Banrisul, can be found in Note 29, pages 118 and 119, to the 2022 Financial Statements, available here.

The Control and Risk Executive Office is responsible for managing the Institutions’ corporate risks.

As regards Integrated Capital and Corporate Risk Management, the Chief Risk Officer (CRO) is responsible for the Corporate Risk Management Department and his/her duties include ensuring that the risk process monitors, controls, evaluates and plans capital need and goals and identifies, measures, monitors, reports, controls and mitigates credit, market, IRRBB, liquidity, operational, social, environmental and climate risks associated with the Prudential Conglomerate, communicating said risks to the Risk Committee, the CEO, the Board of Directors and regulatory agencies.

The Corporate Risk Executive Superintendent reports to the CRO on the Institution’s risk management. At least every year, risk management reports are submitted to the Board of Directors for consideration.

Banrisul’s Whistleblowing Channel is a communication tool through which employees, customers, users, partners or suppliers report possible misconducts of any nature related to the Institution’s activities that affect its reputation and violate its internal controls and Banrisul’s Compliance Program. The whistleblowing channel is available on the Bank’s institutional website or on the intranet, where a registration form can be filled out anonymously.

The internal and external channels for submitting complaints and queries covered by the Policy are disclosed, respectively, on the Corporate Intranet and on Banrisul’s website – www.banrisul.com.br, in the section Whistleblowing Channel.

In the event of non-compliance with this Policy and related regulations, actions will be taken according to the level of the offender’s relationship with the Bank:

– if an Employee, sanctions provided for in item Sanctions of the Personnel Regulations will be adopted, appropriate to address the non-compliance;
– if an Officer or Board/Committee Member, the non-compliance will be reported by the Internal Audit to the Board of Directors, complying, when applicable, to Banrisul’s Whistleblowing Policy;
– if an Intern or Outsourced Employee, sanctions provided for in the agreement will be adopted.

If managers, other employees and/or other related parties become aware of misconducts and do not report them to the Personnel Department or the Whistleblowing Channel, they will also be held accountable.

Regardless of the degree of relationship with Banrisul and the penalty adopted, anyone who fails to comply with the organizational policies may be held civilly or criminally liable for proven misconduct.

Performance evaluation is an essential step to assess effectiveness, contributing to enhance the Organization’s governance. The Board of Directors carries out an annual formal evaluation of the Executive Board and its Chair performance, as well as of its own performance, a process that include self-evaluation questions. The annual evaluation is carried out according to procedures previously defined by the Board of Directors and is anonymous and individual.

All answers to the evaluation questionnaires are compiled into a report, which is sent to the Eligibility and Compensation Committee for prior analysis and then presented to the Board of Directors for consideration. The body itself suggests improvements in carrying out their duties.

BOARD OF DIRECTORS

FISCAL COUNCIL

AUDIT COMMITTEE

ELIGIBILITY AND COMPENSATION COMMITTEE

RISK COMMITTEE

SOCIAL, ENVIRONMENTAL AND CLIMATE RESPONSIBILITY COMMITTEE

¹ Sworn in February 2023.

EXECUTIVE BOARD

The joint development of commitments, indicators, and targets proposed by the Bank’s departments has been showing the topic’s greater maturity within the institution and the leadership’s stance. The main guideline is the Bank’s strategic planning, established by the ESG pillar.

The methodology used to create the agenda enabled a greater engagement of the units and executive offices, which had to work together and expand their knowledge. his is an ongoing process, but it is already possible to see advancements in the governance front. In order to prepare the ESG Agenda, Banrisul assessed internal and external information to obtain an overview of the efforts required to position itself aligned to market expectations. The Company used data from interviews with senior management and online stakeholder survey to prepare its materiality matrix, and meetings and workshops with key departments to get their opinion on suggested actions, targets and indicators.

The effectiveness of this measures is yet unknown, as their results will be seen after the due implementation of the 2030 Agenda.

After the Management Proposal is published, the shareholders make nominations for the Board of Directors, which are subsequently submitted to the Chief of Staff of the Government of the State of Rio Grande do Sul for approval. If the nominations are approved, their names and information will be forwarded to the Treasury Department for the opening of an administrative proceeding via the PROA system. Upon the receipt of the Administrative Proceeding, the Eligibility and Compensation Committee analyzes the nominee, taking into consideration the eligibility requirements outlined in the Nomination and Succession Policy, which determine that the background and experience of the nominees for the Board of the Directors should be assessed, as well as their time availability to perform the duties, diversity, knowledge, experience, behavior, cultural aspects, age group, and gender. The Committee’s opinion is forwarded to the State Attorney General’s Office for a final decision about the fulfillment of the requirements and the absence of impediments. Once the nomination has been approved by the State Attorney General’s Office, the proceeding returns to the Company, so that the election can be held.

Every two years, before the Annual and Extraordinary Shareholders’ Meeting, shareholders submit their candidates for the highest governance body. The controlling shareholder makes its nominations considering the criteria set forth in the current legislation (Federal Law 13,303/16; Federal Law 6,404/46 and State Decree RS 54,110/18).

In 2022, the Nomination and Succession Policy was updated and stated that the election of Banrisul’s Board of Directors members, should include seats for Diversity groups as of 2023, as follows: I – the shareholder, or group of shareholders, with a right to nominate 25-40% of seats on Banrisul’s Board of Directors, shall be responsible for allocating at least one of the openings for members of the Diversity group; II – the shareholder, or group of shareholders, with a right to nominate for Banrisul’s Board of Directors any percentage higher than that established in item I must allocate two or more openings for members of the Diversity group; III – Grupo Banrisul must adjust the composition of the Boards of Directors, which shall respect the minimum percentage of 30% for openings aimed at the Diversity group, by 2030.

Independence criteria must also be considered, as provided for in article 22 of the Bylaws, which can be read here.

Banrisul’s current eligibility process involves several spheres (State Department of Finance, State Chief of Staff and State Attorney General’s Office, among others). This verification flow conveys security and reliability to all stakeholders.

The responsibilities of the Eligibility and Compensation Committee are:

(i)  drafting the compensation policy for Management of the Bank and its subsidiaries, suggesting to the respective Boards of Directors various forms of fixed and variable compensation, in addition to benefits and special recruiting and severance programs;
(ii) proposing to the Boards of Directors of the Bank and subsidiaries the overall Management compensation amount to be submitted to the respective Shareholders’ Meetings, pursuant to Article 152, of Law 6,404, of 1976;
(iii) assessing future internal and external scenarios and their possible impacts on the Management compensation policy of the Bank and its subsidiaries;
(iv) analyzing the Management compensation policy of the Bank and its subsidiaries vis-à-vis market practices in order to identify significant discrepancies compared its peers, proposing the necessary adjustments.

As per CMN Resolution 3,921/10, the Eligibility and Compensation Committee is responsible for assisting in the process of determining compensation. The Committee is composed of three independent members, all of whom are natural persons residing in Brazil, with higher education degrees and technical skills suitable for the position they hold. The members also meet the criteria for holding positions in statutory bodies of financial and other institutions authorized to operate by the Brazilian Central Bank.  

The board   members convene in ordinary and extraordinary meetings, and their considerations are recorded in minutes. In turn, shareholders can express their opinions at the Annual/Extraordinary Shareholders Meeting.

The Board of Directors members are only entitled to fixed monthly compensation as fees, and are not entitled to variable compensation or direct and/or indirect benefits. Executive Board members are entitled to monthly compensation in the form of monthly wage plus a representation fee, the annual amount of which must not exceed the overall management compensation amount set by the Extraordinary and Annual Shareholders’ Meeting. They are also entitled to Banrisul’s Profit Sharing Program (PLR, in Portuguese), calculated in accordance with the rules established by the Board of Directors, considering the rules applicable to the payment of PLR to employees, as defined in the Banking Employees’ Collective Bargaining Agreement. In addition to the PLR, the Banrisul Conglomerate may pay variable compensation to its executive officers, provided it is included in the overall compensation approved by the Shareholders’ Meeting, observing the limits established by the legislation in force and based on criteria that may be defined by the Board of Directors.

The composition of the Board of Directors ensures a seat for common minority shareholders, preferred minority shareholders and a representative of the employees, who is chosen by internal election, according to the Board of Directors Charter. Thus, stakeholder groups are engaged in the Board of Directors meetings.

The Board of Directors is responsible for the Company’s overall direction of business, institutional guidelines and goals. As regards Integrated Capital and Corporate Risk Management, the Board is responsible for:

a) Establishing the Institution’s risk appetite levels in the Risk Appetite Statement (RAS) and reviewing them supported by the Risk Committee, the Executive Board and the Chief Risk Officer (CRO);
b) Ensuring compliance with the Institution’s policies, strategies and risk management limits;
c) Whenever necessary, authorizing exceptions to policies, procedures, limits and risk appetite levels set out in the RAS;
d) Ensuring that the Institution’s compensation structure does not encourage behaviors that are incompatible with risk appetite levels set out in the RAS;
e) Ensuring that the Institution keeps adequate and sufficient capital and liquidity levels;
f) Having a broad and integrated knowledge of risks that can hinder capital.

As for Corporate Risk Management, the Board of Directors, the Risk Committee, the CRO and the Executive Board have seral joint responsibilities, including:

a) Understanding, in a broad and integrated way, risks that can impact the Institution’s capital and liquidity;
b) Understanding the limits of information included in capital and risk management reports;
c) Ensuring that the Institution complies with the content of the RAS;
d) Understanding the limits and uncertainties related to the assessment of risk models, even when they are developed by a third party, and the methodologies used in risk management structure; and
e) Ensuring the Institution’s different levels understand and continually monitor risks.

The Board of Directors meets periodically to evaluate changes to the capital and corporate risk management policies, as well as management reports on the main risks to which the Institution is exposed. At Management level, Banrisul relies on the Corporate Risk Committee and the Control and Risk Executive Office and, statutorily, on the Statutory Risk Committee.

In compliance with CMN Resolution 4,945, of September 15, 2021, Banrisul’s Social, Environmental and Climate Responsibility Policy (PRSAC, in Portuguese) determines that it is incumbent upon the Executive Board, a governance body elected by the Board of Directors, to:

a) provide input and participate in the decision-making related to the drafting and review of the PRSAC, assisting the Board of Directors;
b) support the implementation of actions to ensure this Policy’s effectiveness;
c) monitor and evaluate implemented actions;
d) ensure that implemented actions are improved whenever possible deficiencies are identified;
e) help and encourage the adequate and reliable dissemination of mandatory information;
f) manage the PRSAC at Banrisul. The responsibilities of the Board of Directors include ensuring that the Institution complies with the PRSAC and taking measures to ensure its effectiveness.

Banrisul has a the Social, Environmental and Climate Responsibility Committee (CRSAC, in Portuguese), an advisory body to the Board of Directors, whose duties and responsibilities are to:

a) make recommendations to the Board of Directors on the drafting and review of the Social, Environmental and Climate Responsibility Policy;
b) evaluate if the actions implemented are in compliance with the Social, Environmental and Climate Responsibility Policy and, whenever necessary, make recommendations for improvement;
c) keep records of its deliberations and decisions;
d) evaluate and monitor the Bank’s sustainable performance and the effectiveness of the actions laid down in the Sustainability Plan;
e) monitor advancements in sustainability, seeking to identify opportunities and risks, in order to create value for the Bank and its stakeholders;
f) propose and follow-up the execution of initiatives that improve the Bank’s socio-environmental performance;
g) assisting the Board of Directors in incorporating sustainability into the Company’s business strategy and administrative practices and follow up its progress;
h) analyze, monitor and issue recommendations and opinions to support the Board of Directors’ decisions on policies and practices related to its field;
i) fulfil other duties determined by the Board of Directors.

The Fiscal Council, through any of its members, is responsible for overseeing Management’s acts and verifying compliance with legal and statutory duties, according to the Fiscal Council’s Internal Regulation.

Banrisul does not have a policy on tax risk management. Some of the tax risks are identified, managed and monitored focused on Operational Risk, e.g., compliance with the legislation and rules.

The Operational Risk department identifies risks, whose control compliance are assessed by the Controls and Compliance department. Moreover, the Company has a whistleblowing channel, with a general scope that can receive reports on taxes.

Banrisul does not have a policy on tax risk management. Some of the tax risks are identified, managed and monitored focused on Operational Risk, e.g., compliance with the legislation and rules. The Fiscal Council, through any of its members, is responsible for overseeing and assessing Management’s acts and verifying compliance with legal and statutory duties, according to the Fiscal Council’s Internal Regulation. The Operational Risk department identifies risks, whose control compliance are assessed by the Controls and Compliance department.

Banrisul’s organizational structure includes the Internal Audit department, reporting to the Board of Directors, whose scope of activities considers all duties of Banrisul and the other companies in the conglomerate, in compliance with CMN Resolution 4,879/2020.

Therefore, as of the publication of CMN Resolution 4,945, of September 15, 2021, an audit forecast was included in the Internal Audit planning for 2022. Works began in August 2022 and were completed in February 2023. For 2023, a social, an environmental and climate risk management audit is planned according to CMN Resolution 4,557, of February 23, 2017.

The internal audit department is responsible both for the past and for the future audit, as per:

– CMN Resolution 4,945, of September 15, 2021

– CMN Resolution 4,557, of September 23, 2017

Below, we list some Internal Audit findings that are currently being monitored. We must note that all the findings/reports issued by the Internal Audit are in compliance with the Policy on Management of Internal Audit Findings, approved by the Conglomerate’s Board of Directors:

– Actions to ensure PRSAC’s Effectiveness: drafting/preparation and validation of indicators relates to the Sustainability Agenda. Expectation to hire an external consulting firm to assist in this process. Timetable/deadlines will be established by the managing department.

– Dissemination of Complete and Updated Information: combined actions of the Sustainability Corporate Department and the Institution’s other departments, in addition to the creation of working groups for mapping sustainable products and sensitive sectors as regards social, environmental or climate aspects, as well as the forecast for hiring external consultants to assist in this project. Timetable/deadlines will be established by the managing department.

– Implementation of the PRSAC: initiatives to enable the implementation of social, environmental and climate responsibility principle and guidelines established in the PRSAC, as well as to ensure their compatibility and integration with the Institution’s other policies. Expectation to hire an external consulting firm to assist in this process. Timetable/deadlines will be established by the managing department.

¹Considers scope 1 and 3 emissions

As for fugitive emissions, which are encompassed in Scope 1 emissions, Banrisul began a process to modernize its air conditioning equipment, in order to reduce fugitive gas emissions. In this sense, we believe it is already possible to see a slight reduction in fugitive emissions due to this program.

As for mobile combustion, Banrisul will change the fuel used by its proprietary and leased vehicle fleet to ethanol in 2023. The goal is to have the entire fleet using this fuel whenever available (given that not every gas station offers ethanol, especially when the vehicles are located in smaller cities), in order to reduce emissions from mobile combustion.

The reduction seen in emissions for reference year 2022 was due to a reduction in the reference conversion factor used by the GHG Protocol tool. In 2021, the average annual factor (tCO2/MWH) was 0.1264 and, in 2022, it was 0.0426, which explains the decrease in tCO2 equivalent emissions.

Measurement of Scope 3 emissions improved after one year. For the 2022 inventory, Banrisul included additional information in the Upstream Transport category, related to light ATM maintenance vehicles that were not included in the previous inventories. Similarly, cash and money deposit bag transportation increased significantly, in absolute number of liters of fuel used from 562,557 in 2021 to 986,962 in 2022, largely due to the gradual recovery of the economy after the pandemic.

There are no reduction targets defined, since the Bank intends to increase the number of categories included in the Scope 3, leading to an upturn in emissions.

For policies and commitments related to this material topic, the Board of Directors approved the Social, Environmental and Climate Risk Policy (PRASC in Portuguese), which was published in June 2022 and aims to set out the guidelines for the Bank’s and Banrisul Group subsidiaries’ social, environmental and climate responsibility activities, aligned to the nature of their activities and the complexity of their products and services. The PRSAC seeks to foster sustainability, balancing business opportunities with social, economic, environmental and climate responsibilities, contributing to the sustainable development of the regions where Banrisul operates.

The Institutional Policy on Social, Environmental and Climate Risk Management, updated in 2022 based on new regulatory framework, is targeted at outlining the management processes, seeking to mitigate these risks and, consequently, safeguard the assets and interests of its customers, shareholders, employees and other stakeholders.

To manage the topic and its related impacts, Banrisul manages social, environmental and climate risks by identifying, measuring, assessing, monitoring, reporting, controlling and mitigating other corporate risks in an integrated way, keeping risk exposure at a level the Institution is willing to take and ensuring adherence to its Institutional Policies.

The Institution controls and mitigate potential negative impacts through initiatives and strategies that aim to keep exposure to social, environmental and climate risks at adequate levels. Risk treatment options are described and formalized through initiatives that can have one or more procedures and mitigate one or more risks.

Banrisul adopts a series of actions to mitigate potential negative impacts, mainly regarding the exposure of its credit operations, when applicable, i.e.:

– Contractual clauses determining that the borrower must comply with the respective legislation and adopt periodic monitoring;
– Contractual clauses foreseeing the possibility of early maturity of the operations in case of irregularities of this nature;
– Checking if environmental licenses and certificates are valid;
– Requiring the Biosafety Quality Certificate (CQB, in Portuguese), issued by the National Biosafety Technical Commission (CTNBio, in Portuguese);
– Applying the Survey of Indications of Contamination in Urban Properties (LIC, in Portuguese) form;
– Applying the social, environmental and climate risk analysis questionnaire, for operations above R$10 million;
– Monitoring agribusiness credit operations through the Social and Environmental Compliance System.

As regards its activities, Banrisul mitigates its exposure to potential negative impacts by adopting, among others, the listed action:

– In relevant contracting and procurement processes, it identifies the contracting risk matrix and social and environmental requirements.

The Institution identifies and remedies actual negative Social, Environmental and Climate (SAC, in Portuguese) impacts by consulting information in public lists and checking the activities, products and services subject to social and environmental legislation. As for operations, Social, Environmental and Climate Risks inherent to the activity’s economic industry are identified, based on the National Registry of Economic Activity (CNAE – Cadastro Nacional de Atividade Econômica) code.

As for the credit portfolio as a whole, Banrisul is developing a climate stress test model aimed at measuring the impact of climate events on the overall capital index, demonstrating the financial impact and defining new strategies for significant events.

The characteristics of the Institution’s products, services, activities and processes as well as the activities of its counter parties, controlled companies, suppliers and relevant outsourced service providers are assessed for potential risks of violation of fundamental rights and guarantees or acts harmful to the common interest; environmental degradation, including the excessive use of natural resources; and changes in weather patterns.

For each operational risk event, the Operational Losses Database identifies, when applicable, the operational losses linked to the Social, Environmental and Climate Risk. This scope is highlighted in civil and labor lawsuits, administrative proceedings, fines and other events.

To manage the positive impacts, the “Contribution to the Green Economy” indicator is monitored on a monthly basis to measure how much of the corporate credit portfolio is made up of economic sectors with a certain level of environmental and/or social contribution. This indicator is monitored by following up the percentage variation. The higher the percentage, the higher the active balance in financing to industries with a positive social and/or environmental impact, representing a higher contribution from the Institution.

The efficiency tracking processes are evaluated periodically, including assessing the internal and external audits, the Controls and Compliance department’s follow ups, operational risk analysis cycles, among other procedures. The Institution’s exposure to climate risk is monitored on a monthly basis, through the follow-up of the active balance of the corporate credit portfolio, allocated to industries with highly and moderate risk impacts.

The Bank also actively participates in FEBRABAN’s Committees and Working Groups, where it debates current relevant guidelines for this topic, participates in public consultations, and shares best practices with other companies in the industry.

As for goals, targets and indicators to assess progress based on Banrisul ESG Agenda’s recommendations, themes and strategic pillars were defined, and the Company set indicators and targets for strengthening management of social, environmental and climate risks and reducing climate risk.

Even though the Bank has robust risk management, there are still many opportunities to make progress in managing social, environmental and climate risks, especially in defining sensitive sectors and drafting restrictive policies. The recommendations of the ESG Agenda are based on Banrisul’s ongoing or planned actions/projects and the most prominent/most adopted actions by the financial industry.

In order to prepare the ESG Agenda, Banrisul assessed internal and external information to obtain an overview of the efforts required to position itself aligned to market expectations. The Company used data from interviews with senior management and online stakeholder survey to prepare its materiality matrix, and meetings and workshops with key departments to get their opinion on suggested actions, targets and indicators.

Moreover, Banrisul joined the Carbon Disclosure Project (CDP in Portuguese) and the Brazilian GHG Protocol program to enhance its technical and institutional capacity in managing greenhouse gas emissions in order to take stock and report.

Climate change management at Banrisul includes transition and physical Climate Change Risks, as defined by CMN 4,943/21:

Transition climate change risks: possibility of the Institution incurring in losses arising from events associated with the transition to a low carbon economy;

Examples of transition climate change risks include legal and regulatory changes; technological innovations; changes in products and services supply and demand; unfavorable perception from clients the financial market or society in general; events related to the transition to a low-carbon economy and that negatively impact the Institution;

Physical climate change risks: possibility of the Institution incurring in losses arising from events associated with short and medium-term frequent and severe weather events or long-term environmental changes that can be related to changes in climate patterns.

Climate risk events can lead to financial and reputational losses, as well as to process inefficiencies. Possibilities of losses associated with the other types of risks to which the Institution is exposed, especially operational and credit risks, can be identified.

In addition to monitoring the regulatory environment and customer perception, management includes consulting information on public lists and verifying the activities, products and services subject to social and environmental legislation. As for the operations, Social, Environmental and Climate Risks inherent to the activity’s economic industry are identified, based on the National Registry of Economic Activity (CNAE – Cadastro Nacional de Atividade Econômica) code). Climate risk management costs are not calculated individually, but are considered together with the resources allocated to the Institution’s risk management.

The policies or commitments focused on human capital development are part of the “Strengthening People” front of Banrisul’s strategic planning, considering that employees are the means for achieving organizational success, thus the need for a fresher look and continuous encouragement to developing and improving people.

The People Development Superintendence Department – Corporate University is responsible for managing this topic and its impacts and reporting to the Executive Board. Its duties include “to manage the development, implementation and monitoring of in-person and distance education programs, seeking learning technologies solutions and contributing to the culture of innovation at Banrisul”. Furthermore, the HR areas share strategies and decision-making. The Annual Training Plan, which brings together all areas and Regional Superintendencies in its development, is analyzed jointly and submitted to the Committees and the Board of Directors for approval, accompanied by the respective budget plan.

The actions taken to address potential negative impacts include: onboarding of new employees; training programs for career development; academic incentive program, encompassing undergraduate, specialization, master’s and doctorate degrees; enrollment in paid external courses, refresher webinars on products, services, legislation and topics of interest, symposiums, congresses, among others; international missions; the reach of coursed offered via Moodle platform, favoring the ongoing development and incentive to self-development, regardless of geographical location.

Actions taken to address actual negative impacts include adapting educational technologies in order to provide a better experience for colleagues working at the branches by, for example, offering training sessions with audio and subtitles, enabling a better participation in the courses; organization of trails in different formats, promoting employees self-development. Offering more webinars on topics that attract a large audience, with the option of watching the recorded version for employees who, for different reasons, were not able to watch the presentation live.

Actions to manage actual and potential positive impacts: developing educational strategies and programs through co-production by integrating the branch network’s and general management’s point of view, focused on using knowledge to enhance productivity and provide better service; using inclusive and integrative language to inform about programs and development tracks; strengthening capacity building by bringing all units and Regional Superintendencies closer together through the employees’ academic research; making the final papers of graduating employees available so that research can be accessed by other employees and taken further.

In order to track the effectiveness of these actions, Banrisul monitors investments made, course attendance, certificates received, mandatory courses, career progression based on training programs; surveys the participants of courses and webinars; and verifies the applicability of academic research; among others.

The Annual Training and Development Plan’s strategy involves several stages, i.e., online survey available to all employees; focus groups with representatives from the Branch Network and General Management; analysis of strategic planning guidelines, market trends and gaps reported to the HR departments.

Banrisul evaluates corporate education based on the following indicators: investment, number of employees who attended courses, number of employees who received certification, training hours per employee, courses/events satisfaction level, courses/events quality level.

Periodically, quantitative data on trained employees are shared with the Executive Board and the entire staff in articles published in the internal portal. Moreover, every time Banrisul identifies a position that needs to be filed, specific training is developed to prepare professionals to meet the requirements of the job as market managers, business operators, agribusiness relationship managers, among others. Incentive to academic research encourages employees to share their work via banritalks and the virtual library, making knowledge accessible to the entire staff. Employees can request external and internal courses, such as webinars, via workflow, which enables the analysis, monitoring and conclusion of the process. Information on distance learning courses is published monthly, highlighting free and mandatory programs, in compliance with the legislation.

Given that finance is the Bank’s expertise and that employees should handle their own personal finances, a program was developed to offer financial education to all employees.

The branch network and General Management producing knowledge together enable sharing points of view that enhance the Annual Training Plan, as well as strategies for its implementation. Furthermore, the exchange with universities and innovation centers makes it possible to share challenges and solutions both for internal stakeholders and external groups and institutions.

¹ It includes the following employee categories: account manager, market manager, agribusiness relationship manager and business manager (corporate, other states and government).
² It considers all of the Company’s employees.
³ Only those categories that receive performance and competence assessments as a result of the in-house training courses specified in note 1 were taken into account.

Training Program – Business Managers and Business Managers from Other States

The program trains and develops professionals to work at the branch network serving corporate customers. Its contents are focused on developing commercial and technical skills desired in a future Business Manager, such as negotiating products and services; prospecting, attracting, and following up customers through efficient tools and approaches, thus optimizing their business actions.

Training Program – Account Managers

The program promotes the integration, training and development of the employees selected to work in the new Account Manager position, developing the required skills and attitudes for performing their activities well, with emphasis on the development of interpersonal competencies focused on preparing them for building a relationship with high-income individual customers.

Training Program – Business Operators

The program trains employees selected to work in the new Business Operator position, aiming to prepare professionals to serve and address the Bank’s Individual Customers. Its contents include specific technical knowledge with efficient tools and approaches to optimize business with customers.

Training Program – Supervisors

The program prepares and develops professionals to work as Supervisors in the branch network, serving the Bank’s internal and external public. It develops and enhances basic, technical and job-related skills, as well as skills related to other positions in the bank and managerial ones, focused on planning, organizing and executing the position. Aligned to the Bank’s Strategic Planning, it aims at achieving administrative and commercial goals.

Training program – Market Managers

The program trains and develops employees selected for the new Market Manager position in the branch network, to work serving the Bank’s Corporate and Individual Customers. The program enhances and develops technical and behavioral skills, focused on negotiating, prospecting, attracting and following-up with customers. Training Program for Agribusiness Relationship Managers.

Training Program – Agribusiness Relationship Managers

These professionals will manage a pre-established customer portfolio of the respective banking stations at the Suregs, focused on medium- and high-income rural produces. This position aims to serve a customer niche who demands special and exclusive treatment.

Training Program – Agribusiness Managers

The program prepares employees selected for the new Agribusiness Manager position, developing technical skills focused on the agribusiness segment, expanding their knowledge of rural credit products and services, aiming at attracting and managing new business in this segment.

Training Program – Corporate Business Managers

The program aims to train professionals to manage large companies. It is important to note that this position serves a customer niche who demands special and exclusive treatment.

Training Program – Government Business Managers

The Training Program for Government Business Managers aims to prepare professionals to work at the superintendencies, in line with the Government Business Unit’s goals.

GRI 404-2

¹ It includes business managers in the categories: corporate, other states and government; account managers, market managers, and agribusiness relationship manager.

GRI 404-2

Career transition assistance programs focused on facilitating continued employability and end of career management due to retirement or termination of employment contract – specially for retired employees are not being offered at the moment. As regards continued employability, the Bank follows-up with the participants of the Pescar Project and the Young Apprentice Program in order to monitor their insertion in the job market after completing their experience at Banrisul.

The year 2022 was very important for the progress of the Diversity, Equity & Inclusion agenda, as this topic was internally institutionalized, and formal Governance mechanisms were introduced to move this work forward. To ensure diversity and collaboration that this topic requires, Banrisul created three initial Affinity Groups: Gender Equity, whose main goal is the pursuit of gender equity; People with Disabilities, with the main purpose of fostering the inclusion of colleagues with disabilities; and Race, whose goal is to promote racial equity.

To support and coordinate these Affinity Groups Banrisul created a Diversity, Equity & Inclusion Committee, composed of members from various backgrounds and the Affinity Groups’ coordinators, ensuring the necessary diversity and representativeness to address the agendas. The diversity indicators are still being developed to provide the grounds to monitor related impacts.

Card-related losses incurred in the reporting period totaled R$1.8 million.

The management of this topic started with the structuring of the Data and Analytics Management department, in 2019, and included the appointment of the Data Protection Officer (DPO), who is responsible for conducting internal activities to ensure compliance with the General Data Protection Act (LGPD, in Portuguese) and serve as a focal point between the Organization, the holders of personal data and the National Data Protection Authority (ANPD, in Portuguese).

The Data Privacy and Protection Governance Program was created to mitigate potential negative impacts.  As part of the Program, a quarterly report is sent to the Internal Audit for compliance reporting. The Program covers several fronts, including:

• Mapping of all activities involving personal data processing, identifying the data life cycle, from collection to deletion, as well as the appropriate legal framework;

• Creation of a customer service channel for holders of personal data, ensuring the full exercise of all the rights set out in the LGPD;

• Formalization in a Standard of a flow of adaptation of contracts with third parties for compliance with the LGPD, including the definition of a methodology to help identify the Processor x Controller x Joint Controllers and define the flow for indicating LGPD clauses for business and administrative contracts;

• Implementation of the Privacy by Design and Privacy by Default methodologies in order to ensure the privacy and protection of personal data in the design of new products and services;

• Creation of specific guidelines for handling or responding to security incidents involving personal data considering the requirements imposed by the LGPD in order to complement Banrisul’s existing Information and Cyber Security Policy; and

• Development of internal training for all the staff on the main points addressed by the Law and their impacts on the workplace, as well as creation of a website featuring content that helps disseminate a culture of data privacy and protection in the Institution.

In order to address the actual negative impacts, Banrisul has approved the reporting flow of data breach incidents and created Guidelines for Prevention and Response to Personal Data Incidents. These documents are designed to ensure the prevention of personal data incidents related to Banrisul and its customers, including the means/processes that should be implemented to mitigate and/or remedy any adverse impacts thereof, as well as appropriately respond to and deal with these incidents.

To track the effectiveness of the actions, quarterly reports are made to the Audit Committee and information is provided to any internal audits. The Bank organizes an annual calendar of activities of the Data Privacy and Protection Governance Program, covering all the goals and targets for the period.

The plan is designed based on the Regulatory Agenda of the National Data Protection Authority and best market practices, taking into account sustainability aspects.The annual plan of the Privacy and Data Protection Governance Program defines indicators, which, after approved by the Executive Board, are submitted to and monitored by the Strategy and Planning department. The Program runs continuously.

Management approach

The Ombudsman’s Office classifies the complaints received by its channels into topic, item and root cause. Regarding subject, there is a “bank secrecy” item, which is under the topic “other subjects” and the root cause “LGPD” (Brazilian General Data Protection Law). In 2022, five customer complaints were filed related to bank secrecy and/or LGPD, including in external agencies; four of these complaints were classified as invalid and only one was classified as valid (not resolved). In the latter, there was proof of a data breach.

The report classified was valid was received through the Consumer Protection Agency (Procon, in Portuguese)/RS (external agency).

The policies or commitments focused on this material topic are the Social, Environmental and Climate Responsibility Policy (PRSAC, in Portuguese) that regulates processes and business in a comprehensive way; however, the Green Bureau will be soon implemented by the Central Bank (for the Agribusiness segment), which will allow rural credit benefits to be granted to customers who fit the Program’s sustainability criteria.

As regards actions taken to manage this topic and its related impacts, focused on strengthening the offer of rural credit, the Programa Sementes (Seeds Program) and Operation 365 were expanded, which encourage the preservation and maintenance of the chemical, physical and biological quality of the soil, thus increasing productivity. Branch network’s employees receive training, almost every month, on sustainable rural credit products to support the offer of financing for the production of biofertilizers.

In the credit granting process, Banrisul prepares a risk assessment report for transactions totaling more than R$10 million including a social, environmental and climate analysis of the company. To improve and speed up the credit granting process, documents are digitalized and input into a social and environmental compliance system for credit proposals.

The social and environmental compliance system also verifies if the company receiving the financing has any restrictions for the granting of rural credit, e.g., conservation units, IBAMA and ICMBio embargoes, and being listed as a company that use forced labor; therefore, this tool is used to address actual negative impacts arising from this topic. Banrisul also relies on a network of associated technician for preparing projects/budgets.

To track actions taken, the data collected in the system undergo internal and external audits, benchmarking process, and inspections by both the Brazilian Central Bank and the BNDES. Banrisul also hired a consulting company specialized in agribusiness to monitor the internal movements, suggesting process improvements.

These measures aim to comply with the environmental legislations and review the Company’s internal regulations, in order to keep them up to date. Through courses, training programs and verification of the compliance system in all financial departments, Banrisul was able to share and improve the knowledge about social and environmental compliance.

As regards economic impacts, in granting agribusiness credit, the feasibility of the proposals is verified by checking projects and cash flow estimates. To manage positive social impacts, Banrisul does not grant credit to people who have restrictions and makes specific allocations available for small and medium-sized producers. The Bank also offers a crop insurance product called Proagro Mais that covers production costs and funds to maintain the producer’s costs in case of problems with the harvest.

We are always analyzing market trends, proposing projects to develop our reposition products, services, and fees with other product management areas through research, suggestions received through the ombudsman, and benchmarking with the areas. The goal is to increase the granting of rural credit with a sustainable bias.

Focused on creating an investment fund that integrates ESG  matters, in 2022, Banrisul held meetings with renowned consulting companies to survey the resources needed to implement this new process. A working group responsible for the “sustainability” topic has been set up in the Company, which has the task of assessing the issue in greater depth and implementing the actions required for the creation/inclusion of ESG investment products in the portfolio.

The Bank does not use the positive screening criterion for Development Lines; however, the approach used excludes companies that are not in compliance with it, whether environmental or labor, and takes into account the applicable legislation and the requirements of the onlending agents (BNDES, FINEP and FGTS). Thus, the borrower’s legal, social and environmental compliance is monitored by the competent technical area. As for social and environmental criteria, Banrisul has adopted the practice of not granting credit to companies that carry out activities that do not comply with the proper environmental agency, i.e., companies that do not have an environmental license. If the borrower is included in the Ministry of the Economy’s list of employers that submit their workers to degrading forms of labor or keep them in conditions similar to forced labor is also considered a restriction for credit approval.

In order to mitigate social and environmental risks throughout the operation’s effectiveness, the Bank relies on contractual clauses for extraordinary or early maturity for cases of non-compliance with legislation, problems with environmental licensing, crimes against the environment, forced and child labor. There are no exclusions or limitations to audit coverage related to regions or products and services.

There is no percentage of assets subject to positive or negative social or environmental screening.The Agribusiness Department does not use screening criteria. However, before contracting a transaction, the department runs a social and environmental compliance check to verify social issues (forced labor, IBAMA and ICMBio embargoes, administrative improbity and ineligibility) and environmental issues (overlap of the area to be financed with land reform settlement areas, indigenous land, quilombola territory, conservation units, areas embargoed by IBAMA or ICMBio, areas susceptible to flooding, archaeological sites and areas with deforestation alerts. Moreover, in order to grant rural credit, the Bank requires environmental licensing of the financed activity.

The Company does not have a specific sustainability policy for rural credit; however, it complies with state and federal environmental legislation for contracting these transactions. Moreover, Banrisul follows the rules set out in the Rural Credit Manual that addresses social and environmental compliance, which must be verified during the proposal stage, before credit is granted, and during the effectiveness of the contract. Internal credit standards should also be followed. Banrisul’s Social, Environmental and Climate Risk Management Policy and Social and Environmental Responsibility Policy are also complied with.

Banrisul carries out the continuous and integrated management of capital and credit, market, interest rate variation risks for the instruments classified in the banking portfolio – IRRBB; as well as liquidity, operational, social, environmental, climate and other risks considered relevant. Social, Environmental and Climate Risks (RSAC, in Portuguese) are some of the various types of risk to which the Institution in exposed and must be managed in an integrated manner with the other corporate risks.

The Social, Environmental and Climate Risk management structure includes the assessment of Stress Testing results, the monitoring of the risk indicators defined in the Risk Appetite Statement (RAS) and the periodic preparation of reports. In regard to Stress Testing, the Social, Environmental and Climate Risk is included in the other corporate risks since its impacts are mostly observed in credit and in civil and labor lawsuits.

Geared towards meeting the new requirements, Banrisul has developed action plans, which are being implemented and will improve the governance, analysis, management and reporting of social, environmental and climate risks.

When offering a new product, service, or solution, the Bank carried out an analysis to verify potential risks to public health, the environment, infringement of laws and regulations for social and environmental protection, contributing to or being affected by changes in climate patterns.

The policies and commitments related to this material topic include financial education strategies focused on both the internal and external public, based on Bacen Notice 34,201/2019, the Organization’s Social, Environmental and Climate Responsibility Policy and the commitment made to Banrisul’s Strategic Sustainability Agenda.

To manage the topic and its impacts, the financial education strategy is implemented by the People Development Department — Corporate University connecting the working group with employees from several technical areas and from the branch network.

To prevent potential negative impacts of initiatives for young people and the community in general, the Bank designs a strategy jointly with the partner training  institutions to follow up with young apprentices with the purpose to work on financial planning and organization; it also offers modules for young people participating in the Pescar (Fishing) Project and the Young Apprentice Program. In addition, webinars and content are developed on the Moodle platform, catering to the entire staff, including interns.

As for the actual negative impacts, in addition to the above-mentioned initiatives, based on the experience developed by branch managers, the working group and branch representatives co-create a training program for financial education multipliers acting in the communities, considering the appropriate content, activities and language for the different target audiences.

Regarding positive impacts, Banrisul also conducts a diagnosis of every strategy to be developed both for the internal and the external public, identifying their profile and potential vulnerabilities in order to adjust the content and language.

To track the effectiveness of the measures, surveys are conducted on the institutional social media focused on the external public. The staff also responds to surveys on the intranet, helping define topics for webinars and create content for the Moodle platform. For online or in-person lectures, workshops and courses, surveys are conducted immediately after the event, when it focuses on the internal public, and both before and after the event, when it caters to the external public.

The goals reached in 2022 include the launch of a financial education track for the staff on the Moodle platform, development of social media posts and the strategy of following up with young apprentices in the institutions that are part of the Program.

Monitoring of investments

The financial education strategies and their respective indicators are now part of Banrisul’s Strategic Sustainability Agenda. The meetings to co-create strategies with the institutions that are part of the Young Apprentice Program helped identify alternatives to strengthen the bond and follow up with young people by offering financial education. In addition, demands from the community received by the branches drove the proposition of a program focused on capillarity through multipliers.

In 2022, there were 276 participants in financial education strategies, including lectures, webinars, gymkhanas and workshops directly developed by Banrisul employees.

Banrisul has an IT Security Unit, USTI in Portuguese, reporting to the Technology and Innovation Office. The USTI is responsible for Banrisul’s internal and external security culture and its structure supports Bank’s other Units in the design of new solutions and businesses. It is also responsible for proposing improvements to specific information security solutions.

The Unit participates in the Corporate Risk, Internal Controls & Compliance Management, and Information Technology Management Committees to evaluate whether information and cyber security issues were complied with in the propositions, new business solutions, internal control and risk assessments, and IT implementation and projects.

The USTI is also responsible for defining and maintaining the Information and Cyber Security Policy based on best practices and international standards, reinforcing the internal security and communication culture, establishing standards and rules to preserve the Bank’s assets and those of its customers. This policy should be reviewed at least every year.

To meet the ongoing and growing IT security demands, prevent and mitigate potential impacts and remediate actual impacts, the USTI:  

• Prepares and manages the life cycle of security policies, such as the Information and Cyber Security Policy, the Business Continuity Plan and Internal IT Security Standards;
• Offers continuous training to employees who work in IT security and works closely with system suppliers;
• Runs security awareness campaigns targeted at customers and employees, especially the Safe Internet Day campaign and the Digital Security Week organized by FEBRABAN with the slogan “Stop & Think: it can be a scam!”;
• Monitors and fights fraud in Digital Channels, with constant update of the service channels security tools and resources;
• Uses cryptography and digital signatures, Security in Acquiring and Channels;
• Manages vulnerability, detects information security incidents at the Bank’s network and protects against malware by analyzing websites and applications made available by the Bank to its customers and employees and in its systems;
• Ensures Identity Management to control employee access to Banrisul IT resources and permissions;
• Participates in Bacen’s and FEBRABAN’s working groups;
• Supports the Bank’s departments that are directly involved in addressing the negative impacts generated by security incidents.

These campaigns are run every year and widely disseminated to customers on Banrisul’s social media and website, as well as to the Company’s staff on the Intranet. For the internal public, Banrisul released a new Distance Learning Program called Information Security, which includes the Security Manual for Working from Home. Banrisul has also been alerting its customers to IT security. The protective initiatives used by the Bank have prevented “Account Take-over” (ATO) attacks in which the hacker gains control of the customer’s checking account.

This continuous work allowed Banrisul to disseminate the culture of security, raising awareness and engaging all hierarchical levels, starting with senior management. Security processes and procedures to access service channels have been well accepted by customers. This shows that customers have embraced the security culture in their daily lives.

Positive impacts include participation in technology events that discuss security and the receipt of awards for solutions and products with outstanding security features.

The process used to verify the effectiveness of IT security actions are mostly related to compliance with the Information and Cyber Security Policy and feedback received through the business channels. The Policy is an important instrument to control and manage information security. It also lays down part of the actions taken by Banrisul to protect its IT assets.

Banrisul has not recorded relevant security incidents over the last few years. This shows the efficiency of the Bank’s anti-fraud procedures for its products such as Open Banking and API Market Place.

Setting Information Security goals, targets and indicators is a major challenge for Banrisul, as most of them are directly or indirectly susceptible to external factors or actions that depend on multiple parties.

Credit operations for small enterprises and community development are listed in the table for indicator FS7.

No data breach was identified in the reporting period.

At Banrisul, the analysis of credit risk is carried out through statistical models for individuals and for the mass corporate segment, which comprises companies with average monthly income of up to R$2 million that do not belong to economic groups and/or exceptional segments.

The exceptional segment is identified based on the company’s main activity in the national classification of economic activities (CNAE, in Portuguese) and includes companies that have atypical cash flows, as well as those that are not targets of Banrisul’s market of interest.

In the segments with little commercial interest, we list the segments with high environmental and social risk. Companies that are not subject to the mass analysis are analyzed on a case-by-case basis observing quantitative and qualitative aspects.

The Bank currently checks with external agencies whether the customer, either an individual or a company, has been listed as an “Employer that uses Forced Labor” or as causing “Environmental Damage” (conviction for environmental damage in actions filed by Brazil’s environmental protection agency (IBAMA, in Portuguese)). Potential new customers identified as an “Employer that uses Forced Labor” are not allowed to obtain credit of any type. If existing customers are included in this list, Banrisul takes specific measures to discontinue the business relationship. The occurrence of environmental damage, on the other hand, prevents customers from obtaining specialized credit lines.

Regarding social aspects, there are markings in the Risk Calculation and Negative Occurrence systems indicating individual customers classified based on a proprietary model to identify vulnerabilities, in which customers with a high score go through a special credit granting process, with the application of regulations to product policies. In addition, the credit granting guidelines define the overall limits that should be considered in the process, preventing over-indebtedness.

Moreover, in larger transactions, especially those involving larger companies or exceptional segments (for which we do not set limits using a mass model), Banrisul carries out a case-by-case analysis using data from the financial statements, notes to the financial statements and other information, in addition to requiring the filling out of a specific checklist to learn more about the customer, helping analysts obtain qualitative information that will be used in their report and risk analysis, as well as in the definition of the exposure limit.

In order to include a qualitative aspect in credit analysis, Banrisul incorporated an ESG assessment tool into the process. The tool uses a questionnaire completed by companies/economic groups with exposure or proposed risk limit higher than R$5 million to generate a score that is incorporated into the customer’s internal risk rating. It is being used to assess the risk limit of sectors considered to be more sensitive to ESG aspects. ESG aspects are analyzed qualitatively by credit risk analysts in line with Banrisul’s Institutional Manual/Social, Environmental and Climate Policy.

The risk analysis for the establishment of the exposure limit is general in nature, i.e., it addresses the most relevant information and considerations for credit risk without taking account the specific characteristics of the credit lines in question. In this context, additional information and analyses can be required during the credit analysis and approval process, with special attention to ESG aspects, especially credit lines for investment, agribusiness and real estate projects.

Given the relevance of credit exposures, all the transactions above R$10 million in which the allocation of funds or credit granted is known are subject to the completion of standardized questionnaires to better measure the social, environmental and climate risk. This questionnaire may also be used in other transactions or in transactions involving a lower amount.

The guidelines related to the products, which complement the Institution’s Credit Policy, are set out in the specific regulations for Agribusiness (N7), Development (N33) and Real Estate (N30).

In order to estimate credit losses during the duration of the contract of the financial assets, the provision for credit losses is calculated monthly for all active contracts based on the rating calculation. Currently, the credit rating of Banrisul’s credit transactions can be hurt if the client does not have an approved credit exposure limit. For some industries, this individual analysis to determine exposure limit is forbidden, for example sectors/CNAE of gambling and betting, several agricultural crops (such as tobacco and sugar cane).

In the context of the Stress Test Program, the scenario is assessed in two stages. At first, the accounting balance of the adverse scenario is used in the ad hoc scenario analysis. All transactions classified as highly exposed to climate risk are downgraded by one level of risk, resulting in a higher provision. The difference between the new provision and the initial provision is then added to the amount of the expected difference between the loss in the adverse scenario and the loss in the credit base scenario.

These data are sent to the budget department, which will calculate the income statement with these new provision amounts, attesting to the Institution’s resilience in the face of a possible stress. Whereas the individualized analyses make use of, but are not limited to, relevant information from the ESG agenda, the knowledge acquired during these analyses, combined with the constant monitoring of trends, is how we currently seek to identify opportunities for improvements in our processes.

As we monitor the credit portfolio, we look at credit allocation according to the sector, as well as the largest individual and economic group exposures. In the geographical context, the statistical models used in credit granting include a variable that indicates the main regions of the state.

The Green Taxonomy (Brazilian Federation of Banks — FEBRABAN, in Portuguese) is used to analyze the risk exposure profile. The assessment is based on the borrower’s code in the National Classification of Economic Activity (CNAE) in three dimensions: Contribution to the Green Economy, Exposure to Climate Change and Exposure to Environmental Risk.

The activities listed in Resolution 237/97 of the National Environmental Council (CONAMA, in Portuguese), which requires environmental licensing for sectors with higher potential impact, were considered in the classification of the Exposure to Environmental Risk. In December 2022, 41.49% of the corporate credit portfolio had high exposure to environmental risk.

The classification related to Exposure to Climate Change was prepared based on the activities defined by Task Force on Climate-related Financial Disclosures (TCFD) as having the highest probability of being affected by transition and physical risks considering three factors: greenhouse gas (GHG) emissions, energy use and water consumption. These sectors were classified as High Exposure, and the activities related to or financially exposed to this sector were classified as Moderate Exposure. In December 2022, 44.61% of the corporate credit portfolio had significant exposure to climate risk.

In addition to the credit risk assessment, the customer’s exposures are controlled to avoid over-indebtedness. Based on the client’s risk rating, size and profile, the Bank determines healthy income commitment levels (percentage of income allocated to debt servicing), as follows:

• For individuals: Overall Limits (OG) are defined to determine the client’s monthly income commitment level;
• For companies in the mass segment: the short-term monthly commitment (C), the Credit Limit (CL) and the Product Limits (PL – six product groupings according to homogeneous characteristics) are used to assess the client’s total exposure, including in the National Financial System;
• For companies analyzed on a case-by-case basis: the Risk Limit (RL) is defined separately between transactions with personal guarantee and security interest.

*Values in thousands of Reais

In 2021, an act of infringement (of non-monetary sanction) and a new lawsuit in progress, with no recorded losses, were identified. The information regarding the content of the events and amounts is considered strategic for the management processes. Furthermore, there were no significant fines and lawsuits filed through arbitration mechanisms.

At Banrisul, credit risk analysis is based on statistical models for individuals and for corporate customers in the retail segment. Corporate customers in the retail segment include companies with average monthly revenue of up to R$ 1 million, which do not belong to economic groups and/or exception segments.

The exception segment is identified based on the company’s main National Registry of Economic Activity (CNAE – Cadastro Nacional de Atividade Econômica). This group includes companies that have atypical cash flows with seasonal periods, as well as those that are not targets of Banrisul’s market of interest. In the segments with low commercial interest, the Bank has listed those with high environmental and social risk.

Legal entities that are not subject to the retail analysis are also analyzed on an individual basis, in which quantitative and qualitative aspects are observed. In the qualitative analysis, besides the governance and management aspects, which are essential for credit risk analysis, environmental and social matters related to the company and its production chain are evaluated. These analyses are performed by risk analysts, who are arranged in specialized groups per sector in which the companies operate, who interact with each other and have an in-depth knowledge of the companies, their role and impact on the local economy – a situation that provides an opportunity for a better identification of possible risk factors and atypical behavior by some companies. Also, for large corporations, risk assessment is carried out based on specific qualitative aspects for approaching ESG topics, which result in a classification that takes into account these aspects without being limited to them.

The retail risk analyses are carried out based on the information recorded in our registration, billing, and incident reporting (BLT in Portuguese) systems. The BLT system gathers have internal and external incidents received from credit bureaus and other official bodies, registering managerial and restrictive incidents that may indicate the worsening of risk from the ESG perspective, among them is forced labor and environmental damage, both considered as impediments to credit assignment. As for individual analyses, in addition to these same controls, data extracted from the financial statements and notes thereto, as well as other information made available by customers are used. They must also fill out a specific checklist, which helps analyst to gather qualitative information that will be used in their opinion, including risk analysis and exposure limits.

Risk analysis for the formation of exposure limit is generalist, that is, it addresses the most relevant information and considerations for credit risk without yet considering the specific characteristics of the credit that will be contracted. Within this context, additional information and analyses may be requested during the analysis and operations are approved observing ESG aspects, with special relevance for investment lines, agribusiness and real estate ventures.

Given the relevance of credit exposures, all operations above R$10 million in which the use of funds or directed credits is known must fill out a questionnaire (Formulário Normatizado Modelo 1.31000.01). The questionnaire may also be applied to other operations or amounts lower than this threshold.

Allowance for loan losses (PCLD in Portuguese) is calculated monthly for all active contracts based on the rating calculation. Currently, the customer not having an approved credit exposure limit is one of the factors that can worsen the rating classification of Banrisul’s credit operations. For some industries, this individual analysis to determine exposure limit is forbidden, for example sectors/CNAE of gambling and betting, several agricultural crops (such as tobacco and sugar cane).

Moreover, the analysis of denials of exposure limits may occur due to the lack of environmental licenses, debts with the union, and one of the consequences is the possibility of worsening the rating classification, especially for customers who already have exposure with the Bank.

Furthermore, regardless of the exposure limit in force and the size of the company or individual customer, in the monthly calculation of the Allowance for Loan Losses, incidents are verified that may worsen the customer’s risk in a timely manner, such as inclusion on the Forced Labor list, Court Restrictions, internal audit notes for fraud, fraud with the Bacen and irregularities with the Brazilian Securities and Exchange Commission.

ESG aspects are assessed qualitatively by the credit risk analysts and the evaluation is in line with Banrisul’s Institutional Manual/ Social and Environmental Responsibility Policy.

Considering that the individual analyses rely on relevant information from the ESG agenda, but are not limited to it, the experiences gathered in the course of these analyses, together with the ongoing monitoring of trends, are currently how the institution identifies opportunities for improvement in our processes.

In monitoring the credit portfolio, Banrisul has viewed credit allocation according to the sector in which the customer operates, as well as the largest individual exposures and those of economic groups. These views are shared with various Banrisul units, contributing to timely initiatives that may lead to adjustments in the automated exposure limits – an action carried out with greater recurrence during the pandemic, in individual analysis of the exposure limits (LR), in adjustments to the parameters of Allowance for Loan Losses calculation or in the worsening of the company’s risk rating – via individual analysis (monitoring) .

In the geographic context, the statistical models used in credit assignment have a variable that signals the main regions of the state where the information is gathered by the customer relationship branch, which, together with the CNAE (corporate customers) or CBO (individuals) information, add to and complement this sector and geographic evaluation.

In addition to the statistical models used for credit risk assessment, which aim at mitigating the risk of default and supporting the credit assignment process, the customer’s exposure is controlled in order to avoid over-indebtedness, which, based on the customer’s risk rating, size and profile, seeks to outline healthy levels of commitment, such as:

– For individuals, Global Limits (LGs) are outlined that mark the level of monthly commitment of the customer’s income;

– For corporate customers in the retail segment, there are the short-term monthly commitment (C), the Credit Limit (LC), and the Product Limits (LP – grouping of products according to homogeneous characteristics) – assessing the customer’s total exposure, including in the National Financial System;

– For legal entities that have individual analysis: Risk Limit (LR) is defined divided between operations with personal guarantees and those with real guarantees.

Also, statistical models are used for individual customers to classify the levels of vulnerability. Vulnerability is assessed in order to mitigate the risks related to the customer’s understanding (or lack of understanding) regarding products and services, as well as the risk of over-indebtedness. In order to qualify the service to customers with higher risk arising from their vulnerabilities or classified at a high level of vulnerability, their credit operations are analyzed exclusively by a higher committee.

In relation to customers who are circumstantially in financial vulnerability, the Bank has specific conditions and credit lines to readjust their financial flows, aiming to preserve Banrisul’s interests – both in receiving the credits granted and in satisfying the customer’s interest – to reorganize their flows and readjust their responsibilities to the Bank.In addition to these customer-focused aspects, the business areas make products focused on sustainability available. There is also a specific policy that establishes criteria for the acceptance of guarantees, which are aligned with the best market practices.

Banrisul is committed to investing in culture, education, sports and technological innovation in order to promote social and economic development in small towns and large cities in Rio Grande do Sul. In this sense, through sponsorships and donations, it supports cultural, educational and sports projects, in addition to hundreds of fairs, shows, and exhibits on family farming, agriculture, livestock, industry, regional tourism, food  and technology, among others.

The projects are evaluated considering their relationship with the various social, cultural and economic aspects of the communities and regions, understanding their potential, interests and needs, and seeking to promote integration and sustainable regional development.

In 2022, Banrisul sponsored more than 200 projects in several areas, distributed in almost 200 municipalities in Rio Grande do Sul, comprising fairs, shows and exhibits on agriculture, livestock, family farming, food and rural development; municipal and regional fairs, shows and exhibits on agriculture, livestock, industry and commerce; and cultural and sports events, music and folklore shows, book and tourism fairs, among other activities involving the public and private sectors. The targets for 2023 include the implementation of the objectives of the Sponsorship Call, with support for 345 selected projects. In addition, a second Call for Proposals is planned for the year.

No administrative proceedings originating from discrimination on any grounds, whether of race, color, sex, religion, etc., were identified in 2021.

No potential risks of child labor or young workers exposed to hazardous work were identified in the Institution’s operations.

Suppliers, especially those with contracts involving the outsourcing of labor, are submitted to thorough checks for compliance with labor and social security obligations, monitoring certificates of good standing, among other actions.

Regarding customers, Banrisul conducts checks to make sure they have all applicable certificates and licenses, in addition to assessing their history of non-compliance.

No potential risks for incidents of forced labor were identified in the Institution’s operations.

As for suppliers, Banrisul closely supervises compliance with labor and social security obligations through the monitoring of certificates of good standing, among other actions.

Customers are checked against a list of employers of who use compulsory labor published by the Ministry of Labor and Employment.

413-1 a) Percentage of operations with implemented local community engagement, impact assessments, and/or development programs, including the use of:

413-1 a) i) social impact assessments, including gender impact assessments, based on participatory processes;

 Banrisul has an ongoing Sponsorship Program designed to support projects in the areas of culture, sports, social responsibility, education and technological innovation with a focus on serving the interests and meeting the needs of the target audience. Projects sponsored and supported by Banrisul seek to expand access to personal training and to cultural activities and equipment that promote, in addition to knowledge and experiences for young people and adults, the generation of employment and income for communities. Some of these investments enable technical improvements in cultural and sports venues, the implementation of projects for the conservation of tangible and intangible cultural heritage and access to innovation and technological training, encouraging young people and children to participate in sports and cultural activities and to generate knowledge and income, expanding opportunities and contributing to the promotion of citizenship, human development and respect for equality.

413-1 a) ii) environmental impact assessments and ongoing monitoring;

Through its sponsorships, the Bank supports third-party projects. There is no effective monitoring of their environmental impact, and the proponents are responsible for adapting to best practices in this field. However, criteria/features such as sustainability, social responsibility and citizenship, democratization, among others, are essential in the analysis of projects supported by Banrisul, and proposals which, for example, damage the environment or mistreat animals are considered inappropriate.

413-1 a) iii) public disclosure of results of environmental and social impact assessments;

413-1 a) iv) local community development programs based on local communities’ needs;

413-1 a) v) stakeholder engagement plans based on stakeholder mapping;

413-1 a) vi) broad based local community consultation committees and processes that include vulnerable groups;

413-1 a) vii) c works councils, occupational health and safety committees and other worker representation bodies to deal with impacts;

413-1 a) viii) formal local community grievance processes.

Not applicable. Banrisul’s sponsorships support third-party projects and, even though the Bank is not in a position to effectively monitor direct environmental impacts, possible environmental risks are assessed from the analysis of proposals to the finalization of projects, and proponents must comply with sustainability principles laid out in the call for proposals. By supporting these projects, the Bank is integrated into the communities, seeking to help transform and improve the quality of life part of the local population. In return, the brand is associated with the various projects supported, expanding the audience reached and the possibilities for relationships with new and traditional customers.

In 2021, 50 lawsuits with non-monetary sanctions related to social aspects were identified, as provided in CMN Resolution No. 4.557/17, as amended by CMN Resolution No. 4.993/21. These events are identified in the Institution’s Operating Loss Base.

There were no significant fines and lawsuits filed through arbitration mechanisms.

100% of Banrisul’s and its affiliates’ contracts with suppliers have specific clauses covering labor and social issues, in accordance with specific legislation.