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Banco Mercantil del Norte S.A. (2022)
| Adoption Date: | 12 Mar 2012 |
| Country of Headquarters: | Mexico |
| Region of Headquarters: | North America |
| Current EPFI Reporting Year/Period: | 2022 |
| Institutional Reporting: | Link to Report - Link to Additional Report |
Please read the important notes and disclaimer for further information on ‘EPFI Reporting’, compliance and publication on the Equator Principles Association website.
Further information on this EPFI may be obtained through the Institutional Reporting hyperlink.
Project Finance Advisory Services
Total number mandated in the reporting period: 0
Project Finance Transactions
Total number that reached Financial Close in the reporting period: 15
| Equator Principles Category | A1 | B2 | C3 |
|---|---|---|---|
| Sector | |||
| Mining | |||
| Infrastructure | 5 | ||
| Oil & Gas | |||
| Power | |||
| Others | 1 | 9 | |
| Region | |||
| Americas | 1 | 14 | |
| Europe, Middle East & Africa | |||
| Asia Pacific | |||
| Country Designation | |||
| Designated Country 4 | |||
| Non Designated Country | 1 | 14 | |
| Both | |||
| Independent Review | |||
| Yes | 1 | 14 | |
| No | |||
| Totals | 1 | 14 | |
1
Category A – Projects with potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible or unprecedented.
2
Category B – Projects with potential limited adverse environmental and social risks and/or impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures.
3
Category C – Projects with minimal or no adverse environmental and social risks and/or impacts.
4
Designated Countries are those countries deemed to have robust environmental and social governance, legislation systems and institutional capacity designed to protect their people and the natural environment. See list of Designated Countries.
Project-related Refinance & Project-related Acquisition For Project Finance
This information is required under EP4. EP4 applies for those transactions mandated after 1 October 2020 and that have reached Financial Close by the end of the period being reported.
Project Name Reporting For Project Finance (And Project-related Refinance & Project-related Acquisition Finance For Project Finance)
Number of projects that were not disclosed as per the disclosure conditions specified in Annex B of the Principles: 15
Under EP4, project name reporting is required for Project Finance transactions that have reached Financial Close and encouraged for Project-Related Corporate Loans that have reached Financial Close.
Project-Related Corporate Loans
Total number that reached Financial Close in the reporting period: 4
| Equator Principles Category | A1 | B2 | C3 |
|---|---|---|---|
| Sector | |||
| Mining | |||
| Infrastructure | 1 | 1 | |
| Oil & Gas | |||
| Power | |||
| Others | 2 | ||
| Region | |||
| Americas | 3 | 1 | |
| Europe, Middle East & Africa | |||
| Asia Pacific | |||
| Country Designation | |||
| Designated Country 4 | |||
| Non Designated Country | 3 | 1 | |
| Both | |||
| Independent Review | |||
| Yes | 3 | 1 | |
| No | |||
| Totals | 3 | 1 | |
1
Category A – Projects with potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible or unprecedented.
2
Category B – Projects with potential limited adverse environmental and social risks and/or impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures.
3
Category C – Projects with minimal or no adverse environmental and social risks and/or impacts.
4
Designated Countries are those countries deemed to have robust environmental and social governance, legislation systems and institutional capacity designed to protect their people and the natural environment. See list of Designated Countries.
Project-related Refinance & Project-related Acquisition For Project-related Corporate Loans
This information is required under EP4. EP4 applies for those transactions mandated after 1 October 2020 and that have reached Financial Close by the end of the period being reported.
Project Name Reporting For Project-related Corporate Loans (And Project-related Refinance & Project-related Acquisition For Project-related Corporate Loans)
Number of projects that were not disclosed as per the disclosure conditions specified in Annex B of the Principles: 4
Under EP4, project name reporting is encouraged for Project-Related Corporate Loans that have reached Financial Close and required for Project Finance transactions that have reached Financial Close.
EP4 applies for those transactions mandated after 1 October 2020 and that have reached Financial Close by the end of the period being reported.
Implementation of the Equator Principles
IMPLEMENTATION OF THE EQUATOR PRINCIPLES AT BANORTE
Social and Environmental Risk Management System
The Socio-Environmental Risk Management System (SEMS) was established to identify, categorize, evaluate and to manage the risks and impacts of the financing we provide in Corporate, Commercial and Infrastructure banking. The SEMS is an integral part of the bank’s credit process and is based on the national legal framework, institutional regulations, socio-environmental risk policy and the Equator Principles, which is the highest standard for risk management in the financial sector.
In 2022, SEMS celebrated ten years of operation under the Socio-environmental Risk team, which at the end of the same year strengthened its capacity, adding talent and experience in the fields of science, research, industry and technology, ratifying our commitment to sustainable financing, the development of projects under rigorous socio-environmental practices, the involvement with our clients and the expansion of the scope of the system.
Organizational Structure
The Socio-environmental Risk Specialized Area (ARSA), composed of a team of experts in the field, is part of the Executive Directorate of Sustainability and Investor Relations and is responsible for the operation and continuous improvement of the SEMS.
The ARSA is supported by the Champions of Sustainability, a group of Credit department partners who act as a link with the Business and Credit areas of the Bank to promote at national level, an adequate social and environmental risk management.
Social and Environmental Risk Analysis Process
The analysis process consists of identification, categorization, evaluation and management of documented risks and impacts, which are presented to the Credit Committees, prior to the authorization of financing.
Identification: We identify the potential environmental and social risks and impacts of the loans and verifies that none of the activities to be financed are on the exclusion list, that is, they are not risky or forbidden activities.
Categorization: We assign a socio-environmental risk level to the credits depending on the magnitude of their impacts and the possibility of mitigating them. The risk is classified according to the Equator Principles in category A (high risk), category B (medium risk) and category C (low risk).
Evaluation: Once the financings are categorized, we select those that must be evaluated through a due diligence, depending on the amount of credit, the financial product, and its destination. All sectors will be subject to evaluation, especially sensitive sectors.
The evaluation consists in verifying the compliance of the projects to be financed with the national legal framework and the guidelines of the Equator Principles, the IFC Performance Standards and the SEMS Evaluation, so we ask customers for information related to permits, resoluteness, licenses, plans, programs, specialized studies, and good practices to elaborate the due diligence.
Management: We monitor the socio-environmental performance of the loans evaluated during the life cycle of the financing. We mainly consider the financings analyzed under the Equator Principles and include annual reviews, continuous advice for clients and Credit and Business executives, site visits, as well as a monitoring of the reputational risk of the projects.
Review of the Equator Principles implementation
As a part of the SEMS continuous improvement process, the Direction of Sustainability and Responsible Investment together with the ARSA verify the operation of the System and the application of the Equator Principles through annual reviews. These consider the achievement of objectives, the identification of improvement opportunities and the feedback of areas like Credit, Risks, Regulations, Human Ressources Training, Communication and Specialized Areas.
In 2022, the Internal Working Group on Climate Change was consolidated to implement the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures) with the collaboration of different Risk and Credit teams, who have participated in updating the internal regulations of the Risk Manual, considering ESG risks (environmental, social and governance), socio-environmental risks, climate risks and nature risks. Likewise, these areas have been actively involved in the implementation of version IV of the Equator Principles.
Training
Ongoing training in the Credit, Commercial and Risk areas is a priority for building a culture of socioenvironmental risk management and sustainability at GFNorte. We are confident that we can better manage our impacts through awareness-raising and skill-building. In 2022 we strengthened our annual online training program with 1,368 employees.
In 2022, the Internal Working Group on Climate Change was consolidated to implement the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures) with the collaboration of different Risk and Credit teams, who have participated in updating the internal regulations of the Risk Manual, considering ESG risks (environmental, social and governance), socio-environmental risks, climate risks and nature risks. Likewise, these areas have been actively involved in the implementation of version IV of the Equator Principles.