CAIXA Econômica Federal (2024)

Governance and Organization of Social, Environmental and Climate Risk at CAIXA

CAIXA’s social, environmental and climate risk management (RSAC) is carried out by the Vice-Presidency of Risks, specifically in the Special Risks unit (GEREP), whose mandate includes, among others:

• Models, guidelines, methodologies and parameters for managing social, environmental and climate risks;
• Stress tests;
• Calculation of economic capital;
• Monitoring and reporting of risks;
• Methodology for identifying risks relevant to CAIXA;
• Preparation of the Social, Environmental and Climate Risk Document (DRSAC).

GEREP develops socio-environmental models and guidelines for the entire bank and is responsible for the Equator Principles, of which CAIXA has been a signatory since 2009. By the end of 2024, there were 17 employees in three teams working on social, environmental and climate risk.

Relevant actions were incorporated into CAIXA for the management of social, environmental and climate risks, namely:

• Inclusion of climate risk in the specialized risk assessment;
• Contracting of a solution for the automated assessment of SAC risks in the credit portfolio;
• Adhesion to the Partnership for Carbon Accounting Financials (PCAF), a leading global initiative in the search for standardization of the method for measuring greenhouse gas (GHG) emissions linked to financing and investments made by financial institutions;
• Signing of the Technical Cooperation Agreement with the federal environmental agency (Brazilian Institute of the Environment and Renewable Natural Resources – Ibama), which provides for the sharing of data between the two institutions, aiming at the use of data from the institute so that CAIXA can handle social, environmental and climate risk in its operations in a more efficient, centralized manner and with geospatial information;
• Expansion on the scope and improvement of activities and processes monitoring, with the inclusion of other sectors and controlled companies.

Regarding the processes related to the EP, the improvements are reported in the topic “Equator Principles.

Internal Processes and Policies

At CAIXA, the management of social, environmental and climate risks is one of the main pillars of the Social, Environmental and Climate Responsibility Policy (PRSAC) that guides the actions of CAIXA and the companies that make up its Prudential Conglomerate, as well as its employees, directors, advisors, partners, interns, apprentices and service providers, where applicable.

This policy aims to incorporate social, environmental and climate responsibility into the spheres of strategy, management, business, products, services, processes, operations and activities of CAIXA, as well as in its relationship with stakeholders, with the aim of promoting sustainability and sustainable development in the country. Thus, the management and monitoring of social, environmental and climate risks have become fundamental for banking businesses to be safe, sustainable and long-lasting.

The Risk and Capital Management Policy contains specific items for managing social, environmental and climate risk, which must be compatible with the complexity of CAIXA’s activities, services, products and processes and be integrated, enabling identification, measurement, assessment, monitoring, establishment of possible limits, reporting, control and mitigation of adverse effects resulting from interactions between risks. This management considers guidelines for sensitive sectors and activities that represent greater potential for social, environmental and climate impact; political, legal, technological and market changes; and the impacts of extreme climate change. CAIXA monitors exposures to economic sectors vulnerable to social, environmental or climate damage and may establish limits as necessary. Appetite measures are reported in the Risk Appetite Statement (RAS) and establish behaviors and levels of risk acceptance for the institution’s operations and maintenance of sustainability, to enable business continuity in a safe and monitored manner. CAIXA’s current Risk Appetite Statement, approved by the Board of Directors in December 2024, establishes risk appetite measures with indicators related to social, environmental and climate risk. CAIXA’s strategy for addressing social, environmental and climate risk is built on an integrative process, with the participation of several areas, bringing discussions on macroeconomic scenarios, risks, trends, capital and opportunities, culminating in the Institutional Strategic Plan (PEI). Its strategic guidelines guide businesses, services, assets and people, by exploring competitive potential and establishing imperatives for action, so that strategic objectives are achieved.

Equator Principles (EP)

About the analysis of projects classified under the EP, the bank follows the international standardization of the International Finance Corporation. We adopt the environmental criteria established by the IFC Performance Standards on Environmental and Social Sustainability, as well as The Environmental, Health, and Safety (EHS) Guidelines.

Projects classified under the EP are assessed using a risk matrix that includes possible impacts on the quality of life of affected communities, on the environment and climate change, and on the health and safety of workers. It is possible to identify which risks are highest in the matrix and, therefore, establish specific contractual safeguards.

In the analysis phase, prior to contracting, for projects classified as High Risk (Category A), the socio-environmental compliance assessment is carried out by an independent consultancy, and this requirement may be extended to Medium Risk (Category B) projects, when CAIXA deems it necessary.

This assessment covers legal requirements applicable to environmental management; climate issues; affected communities (including traditional communities); occupational health, safety and medicine management; environmental license conditions; and implementation of the Basic Environmental Plan for compensation and mitigation of social, climate and environmental impacts, as well as other criteria set forth in the Equator Principles, such as the Socio-Environmental Management System, engagement with stakeholders and complaints mechanisms, among others. In this way, socio-environmental clauses are inserted according to the project’s risk level, bringing customization to the signed contracts, which allows monitoring, after the operation is contracted, of the client’s and project’s social, environmental and climate compliance, based on IFC safeguards. In this case, in addition to the monitoring carried out by the contract manager, for high and medium-risk projects, there is specialized socio-environmental monitoring in the Equator Principles, with a dedicated team to assess project compliance throughout the life cycle of the financing contract. Once contracted, projects begin to comply with several socio-environmental clauses to ensure compliance with the EP. One of the main requirements is the need for periodic socio-environmental monitoring for all projects in Categories A (High Risk) and B (Medium Risk). Periodic socio-environmental monitoring reports are required, with information on the implementation of the project. Depending on the categorization (risk level) of the project, the frequency of monitoring during the construction phase may vary from quarterly to annual, depending on the socio-environmental risks and impacts identified. During the operational phase, and throughout the term of the financing, such monitoring is carried out according to the level of risk identified in the socio-environmental analysis carried out, with a minimum frequency of annual and varying according to the specificities of each project (such as quarterly, four-monthly or half-yearly). This monitoring includes monitoring by independent socio-environmental consultancy, evaluation of corrective action plans, periodic reassessment of identified risks, technical visits when necessary, alignment and awareness-raising meetings with clients, among others. In some specific cases, the bank needs to work more closely with its clients, seeking solutions for the socio-environmental regularity and sustainability of the project.

When it is identified that the financing contract is not being complied with or the client is in breach of the law, violates human rights, causes damage to the environment or acts in disagreement with the Equator Principles and fails to comply with the agreed action plan or violates CAIXA’s PRSAC, the contractual measures provided for are triggered. In this case, CAIXA is authorized to suspend financial resources and, depending on the case, to bring the contract to maturity early.

GEREP periodically reviews the internal rules of the EP to improve socio-environmental risk management and ensure that projects are properly assessed. The business areas must classify operations, forward them to GEREP for assessment, in addition to carrying out all negotiations with the entrepreneur (such as hiring Due Diligence, independent socio-environmental consultancy, contractual clauses). In addition, they are responsible for complying with Principle 8, monitoring the contract and socio-environmental clauses throughout the term of the financing contract.

In 2024, the regulations and instruments for social, environmental and climate risk related to the Equator Principles were reviewed and improved.

The Equator Principles Risk Culture and Training was implemented, which consists of internal training workshops and external training (courses). Two workshops were held: Equator Principles (basics) and Project Finance. The internal training was attended by all employees involved in the socio-environmental analysis and monitoring of projects that fall under the EP, allowing for the exchange of knowledge and alignment within the team. As for external training, two employees took the UNEP FI Environmental & Social Risk Analysis (ESRA) course. In addition, an Internal Guide was prepared, separated by themes, containing links to all the PE Guides, IFC Performance Standards, World Bank Environmental, Health and Safety Guidelines, free training courses available on the internet (such as the Managing Environmental and Social Performance and Sustainability Training and e-learning Program – STEP), training courses separated by themes (biodiversity, social risk, climate risk, health and safety, environmental risk, among others) and EP training videos (such as the e-learning tool and the presentations held in Bangkok).

The projects classified as EP are assessed using a matrix that includes the impacts on the quality of life of the affected communities, on the environment and climate change and on the health and safety of workers, resulting in the socio-environmental risk level classifications defined by the EP (Categories A, B and C). CAIXA’s internal project categorization form (based on Principle 1) has been updated to provide an automated assessment for each type of impact identified, with different weights according to parameters such as scope, magnitude, relevance, mitigation, reversibility and duration.

Another important point was the creation of a summary for CAIXA clients who seek financing for operations that fall under the Equator Principles, which is available for consultation on the CAIXA website.

This document aims to provide basic information on the requirements of the EP, links to consult official documents (such as the Equator Principles themselves, Performance Standards and Environmental, Health and Safety Guidelines) and the bank’s internal flows, providing entrepreneurs with an overview of the next steps for financing.

Equator Principles Contracts 2024

One project financed by CAIXA was contracted, classified under the Equator Principles in the Project Finance modality, related to the sanitation sector (water supply and sewage), and became part of CAIXA’s periodic monitoring of social, environmental and climate risk, with the support of an independent socio-environmental consultancy.

In the “Technical Advisory” modality, CAIXA provided technical support for one public-private partnership project in the Social Housing area through the FEP CAIXA Program.

Transparency and Disclosure of Data

CAIXA’s website provides information on social, environmental and climate risk, in which the Equator Principles section includes a socio-environmental information form that we request for all financing projects that fall under the EP, the terms of reference for hiring socio-environmental consultancy and a summary for entrepreneurs on the topic, available here.

With regard to reporting and disclosure of data, the Report on Social, Environmental and Climate Risks and Opportunities (GRSAC) stands out, the objective of which is to ensure the official disclosure, standardization and qualification of internal and external reports related to data and information on social, environmental and climate risks.

The socio-environmental risk data for 2024 is available in the following document: https://www.caixa.gov.br.

Every year, GEREP reports to higher authorities on the Equator Principles, both to the Bank’s Risk Superintendence to which it is linked, and to the Bank’s General Secretariat, which is responsible for institutional relations with external entities. GEREP is also responsible for the annual report on the Equator Principles with the EP and for the Bank’s Integrated Report or Sustainability Report.

More information on CAIXA’s socio-environmental responsibility, its management of social, environmental and climate risks and on the projects that fall within the scope of the Equator Principles in 2024 can be found in its Sustainability Report: https://www.caixa.gov.br/sustentabilidade

To access the Integrated Report, go to: https://ri.caixa.gov.br/en/company/integrated-report