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Banco Mercantil del Norte S.A. (2019)
| Adoption Date: | 12 Mar 2012 |
| Country of Headquarters: | Mexico |
| Region of Headquarters: | North America |
| Current EPFI Reporting Year/Period: | 2019 |
| Institutional Reporting: | Link to 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: 8
| Equator Principles Category | A1 | B2 | C3 |
|---|---|---|---|
| Sector | |||
| Mining | |||
| Infrastructure | |||
| Oil & Gas | 1 | 1 | |
| Power | 2 | ||
| Others | 1 | 3 | |
| Region | |||
| Americas | 2 | 6 | |
| Europe, Middle East & Africa | |||
| Asia Pacific | |||
| Country Designation | |||
| Designated Country 4 | |||
| Non Designated Country | 2 | 6 | |
| Both | |||
| Independent Review | |||
| Yes | 2 | 6 | |
| No | |||
| Totals | 2 | 6 | |
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: 8
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: 3
| Equator Principles Category | A1 | B2 | C3 |
|---|---|---|---|
| Sector | |||
| Mining | |||
| Infrastructure | 1 | ||
| Oil & Gas | 1 | ||
| Power | |||
| Others | 1 | ||
| Region | |||
| Americas | 1 | 2 | |
| Europe, Middle East & Africa | |||
| Asia Pacific | |||
| Country Designation | |||
| Designated Country 4 | |||
| Non Designated Country | 1 | 2 | |
| Both | |||
| Independent Review | |||
| Yes | 1 | ||
| No | 2 | ||
| Totals | 1 | 2 | |
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: 3
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
Social and Environmental Risk Management System
The Social and Environmental Risk Management System (SEMS) was created to analyze the risks and impacts generated by the activities we finance in Corporate and Commercial Banking, promoting that our clients develop socially and environmentally responsible projects, in compliance with the law and applying the best practices in the sector. SEMS is an integral part of the bank’s credit process and is based on the Equator Principles, the IFC’s Performance Standards and the Health, Safety and Environmental Guidelines.
Organizational Structure
The SEMS is in charge of the Social and Environmental Risk Department (Área de Riesgo Socio-Ambiental, ARSA), a team which is part of the Direction of Sustainability and Responsible Investment, integrated by specialists in environmental and social matters, who are dedicated to the operation and continuous improvement of the process.
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 follow a process of identification, categorization, evaluation and management of risk and impacts that is documented in a due diligence submitted to the Credit Committees, prior to the authorization of the credits. The process is detailed below:
Identification
We identifie 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 (Annex 1), that is, they are not risky or prohibited activities.
Categorization
We assign a level of socio-environmental risk 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, resolutives, licenses, plans, programs, specialized studies and good practices to elaborate the due diligence.
SEMS evaluation represents the third evaluation framework created for credits less than 1 million dollars. Its objective is to analyze the most relevant environmental, social and reputational impacts of credits and its compliance with the current national legislation and international guidelines.
Management
Risk management refers to monitoring the socio-environmental performance of the credits evaluated, during the life cycle of the financing. Mainly considers the credits analyzed under the Equator Principles and includes annual reviews, continuous advice for clients and business executives, site visits and reputational risk monitoring of the projects.
Review of the implementation of the Equator Principles
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, HR-Training, Communication and Specialized Areas.
Also, new defined initiatives for managing environmental and social risks have been dealt with since 2019 in the Risks subgroup of the Sustainability Committee. This working group is led by ARSA and includes members from the Credit Areas, Specialist Areas, Financial Risk, and Operational Risk, who have knowledge and experience aimed at the implementation of the different projects.
Training
Training the Credit, Risks and Business areas is a priority objective to consolidate the culture of social and environmental risk management in Banorte. We are sure that awareness and the development of skills are aspects that contribute to the prevention and mitigation of risks. For this reason, in 2019 we extended the scope of our annual plan of in person and online training, reaching more than 1,800 employees.
In the same way, we increased the socialization of business impact aspects through our internal social networks, issuing periodic communiqués that reached nearly to 12,000 employees, around 400 of them are executives involved in the SEMS process. The updating of the Equator Principles, changes in Mexican legislation, emerging risks, environmental and social risk management in priority sectors, and case studies were some of the topics disseminated.
To ensure an effective risk management and training of the areas involved, ARSA also received training as every year. In 2019, ARSA took courses about natural capital and climate risk issues, mainly.
Further information can be found here.