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\u2019s and Banrisul Group subsidiaries\u2019 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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
Banrisul adopts a series of actions to mitigate potential negative impacts, mainly regarding the exposure of its credit operations, when applicable, i.e.:<\/p>\n\n\n\n
– 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.<\/p>\n\n\n\n
As regards its activities, Banrisul mitigates its exposure to potential negative impacts by adopting, among others, the listed action:<\/p>\n\n\n\n
– In relevant contracting and procurement processes, it identifies the contracting risk matrix and social and environmental requirements.<\/p>\n\n\n\n
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\u2019s economic industry are identified, based on the National Registry of Economic Activity (CNAE – Cadastro Nacional de Atividade Econ\u00f4mica) code.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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. <\/em><\/em> <\/em><\/em> <\/em><\/em><\/p>\n\n\n\n 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. <\/em><\/em> <\/em><\/em> <\/em><\/em><\/p>\n\n\n\n The efficiency tracking processes are evaluated periodically, including assessing the internal and external audits, the Controls and Compliance department\u2019s 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.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n As for goals, targets and indicators to assess progress based on Banrisul ESG Agenda\u2019s 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.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n\n\n
\n \n Impact <\/th>\n \n Classification (positive or negative) <\/th>\n \n Event (potential or actual) <\/th>\n \n Time frame (Short-term or long-term) <\/th>\n \n Systemic or one-time impact <\/th>\n \n Irreversibility (high, medium, low - only for negative impacts) <\/th>\n \n Production chain process or activity that causes impact <\/th>\n \n Resource \/ stakeholder group impacted <\/th>\n <\/tr>\n \n \n Climate change impacts on the Bank\u2019s operation and the sale of its products and services (risk for the agribusiness segment - delinquency) <\/td>\n \n Negative <\/td>\n \n Actual <\/td>\n \n Medium-term <\/td>\n \n One-time <\/td>\n \n Medium <\/td>\n \n Credit assignment for agribusiness. The high concentration of the credit portfolio in customers whose economic industry is more likely to suffer financial impacts from climate change increases the Bank's exposure to physical climate risk. <\/td>\n \n Shareholders and Investors, Employees, Customers, Suppliers, Banrisul\u2019s Operations. <\/td>\n <\/tr>\n \n \n Violation of fundamental rights and guarantees or acts harmful to the common interest <\/td>\n \n Negative <\/td>\n \n Potential <\/td>\n \n Long-term <\/td>\n \n Systemic <\/td>\n \n Medium <\/td>\n \n Financing to customers listed as employers of forced or compulsory labor <\/td>\n \n Shareholders and\u00a0Investors, Employees, Customers, Suppliers, Banrisul\u2019s Operations. <\/td>\n <\/tr>\n \n \n Contribution to a green economy <\/td>\n \n Positive <\/td>\n \n Actual <\/td>\n \n Short-term <\/td>\n \n Systemic <\/td>\n \n - <\/td>\n \n Credit assignment based on an economic model that results in improved human welfare and social equality, while reducing environmental risks and ecological scarcity. <\/td>\n \n Shareholders\u00a0 andInvestors, Employees, Community, Customers, Suppliers, Environment, Banrisul\u2019s Operations. <\/td>\n <\/tr>\n \n \n Events related to the transition to a low-carbon economy <\/td>\n \n Negative <\/td>\n \n Potential <\/td>\n \n Long-term <\/td>\n \n Systemic <\/td>\n \n Medium <\/td>\n \n The high concentration of the credit portfolio in customers whose economic activity is connected to high GHG emissions increases the Bank's exposure to transition climate risk. <\/td>\n \n Shareholders and\u00a0Investors, Employees, Suppliers, Environment, Banrisul\u2019s Operations. <\/td>\n <\/tr>\n \n \n Reduction of the exposure to loss ratio <\/td>\n \n Positive <\/td>\n \n Actual <\/td>\n \n Long-term <\/td>\n \n Systemic <\/td>\n \n - <\/td>\n \n Transition of the credit portfolio to less carbon-intensive industries <\/td>\n \n Shareholders\u00a0 andInvestors, Employees, Customers, Suppliers, Banrisul\u2019s Operations. <\/td>\n <\/tr>\n \n \n Operational, financial and reputational impact from the response time to critical events (related to operational and credit risk) <\/td>\n \n Negative <\/td>\n \n Potential <\/td>\n \n Short-term <\/td>\n \n One-time <\/td>\n \n Medium <\/td>\n \n Comercial relationship with sensitive and carbon-intensive industries. <\/td>\n \n Shareholders\u00a0 and\u00a0Investors, Employees, Customers, Suppliers, Banrisul\u2019s Operations. <\/td>\n <\/tr>\n <\/table>\n<\/div>