Reporting – Banco Mercantil del Norte S.A. (2020)

Adoption Date:12 March 2012
Country of Headquarters:Mexico
Region of Headquarters:North America
Institutional Reporting Hyperlink:EP Annual Report 2020
Current EPFI Reporting Year/Period:2020
EPFI Reporting in Compliance:Yes

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 above.

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: 11

Totals0110
Totals0110
SectorCategory ACategory BCategory C
Mining
Infrastructure3
Oil & Gas1
Power1
Others6
RegionCategory ACategory BCategory C
Americas11
Europe, Middle East & Africa
Asia Pacific
Country DesignationCategory ACategory BCategory C
Designated1
Non-Designated11
Independent ReviewCategory ACategory BCategory C
Yes11
No

1Designated 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. For the list of Designated Countries, go to: https://www.equator-principles.com/index.php/ep3/designated-countries

PROJECT NAME REPORTING FOR PROJECT FINANCE TRANSACTIONS

11 projects were not disclosed as per the disclosure conditions specified in Annex B of the Equator Principles

PROJECT-RELATED CORPORATE LOANS

Total number that reached financial close in the reporting period: 6

Totals060
SectorCategory ACategory BCategory C
Mining
Infrastructure
Oil & Gas1
Power
Others5
RegionCategory ACategory BCategory C
Americas6
Europe, Middle East & Africa
Asia Pacific
Country DesignationCategory ACategory BCategory C
Designated1
Non-Designated6
Independent ReviewCategory ACategory BCategory C
Yes6
No
Totals060

1Designated 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. For the list of Designated Countries, go to: https://www.equator-principles.com/index.php/ep3/designated-countries

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.

Further information on Banorte´s implementation of the EPs is provided at: https://investors.banorte.com/~/media/Files/B/Banorte-IR/financial-information/annual-reports/en/2020/Equator%20Principles%20Annual%20Report%202020_.pdf