Banco do Brasil Sustainable Finance Framework Second-Party Opinion (2021)
Banco do Brasil S.A.
Use of Proceeds
Natural resources/land use management; Renewable energy; Energy efficiency; Green buildings; Clean transport; Water/waste water management; Affordable housing; SME finance and microfinance; Socio-economic advancement; Access to essential services;
Sustainalytics is of the opinion that the Banco do Brasil Sustainable Finance Framework is credible and impactful and aligns with the Sustainability Bond Guidelines 2021, Green Bond Principles 2021, Social Bond Principles 2021, Green Loan Principles 2021, and Social Loan Principles 2021. This assessment is based on the following:
USE OF PROCEEDS
The eligible categories for the use of proceeds align with those recognized by the Green Bond Principles 2021, Social Bond Principles 2021, Green Loan Principles 2021 and Social Loan Principles 2021. Sustainalytics considers the range of eligible projects to have positive environmental and social impacts and to advance a number of UN Sustainable Development Goals including 1, 3, 7, 8, 9, 10, 11, 12 and 15. Sustainalytics notes, however, that the Framework’s criteria deviate from market expectation in four areas: low-carbon agriculture, biofuels, green buildings and clean transportation. Sustainalytics considers this to be a limitation of the Framework.
PROJECT EVALUATION / SELECTION
Banco do Brasil’s Finance Division and Corporate Sustainability Executive Management, supported by other strategic units, will be in charge of project evaluation and selection. The Unit’s Committees of Management will be responsible for approving projects. Banco do Brasil has in place environmental and social risk management processes that are applicable to all allocation decisions made under the Framework. Sustainalytics considers the project selection process to be aligned with market practice.
MANAGEMENT OF PROCEEDS
Banco do Brasil’s Finance Division will be responsible for the tracking and management of the net proceeds. Banco do Brasil’s intends to achieve full allocation of proceeds within 36 months of each issuance, and will temporarily hold or invest unallocated proceeds in the Bank’s cash account, and high liquidity and low risk instruments, such as government bonds. This is in line with market practice.
Banco do Brasil intends to report on the allocation of proceeds on an annual basis and until the redemption of the instrument. The report will be made available on its website. In addition, Banco do Brasil intends to report on qualitative and quantitative impacts. The Bank will also pursue annual reviews from a recognized third-party, until the end of maturity. Sustainalytics views Banco do Brasil’s allocation and impact reporting as aligned with market best practice.