Written evidence submitted by the Brazilian
Development Bank
INTRODUCTION
Since its establishment in 1952, the Brazilian Development
Bank (BNDES) has been a key source of long-term financing for
Brazil's development. In 2009, the BNDES had total assets of USD
270 billion and net income of USD 3.7 billion.
In the early 1990's environmental issues gained importance
with the classification of the environmental risk of projects.
In 2002, this process became anchored in specific environmental
guidelines differentiated by industrial sector (mining, infrastructure,
commerce and services, processing industry and agribusiness).
Based on general characteristics of the respective sector or type
of activity, there are recommendations to prevent or mitigate
potential impacts.
In 2005, the BNDES expanded its capacity to address
socio-environmental issues through the creation of an Environmental
Department and the establishment of an Environmental Policy. The
BNDES' Environmental Policy is a set of standards and guidelines
that guide the institution to fulfilling its role as a public
development institution, while maximizing the positive environmental
and social impacts on the surrounding areas of the projects it
finances.
THE BNDES AND
ENVIRONMENTAL ISSUES
1. The BNDES believes that companies that seek
to improve the environmental performance of production activities
and infrastructure are the driving force behind the economic and
social development. Therefore, this is a strategic guideline reflected
in the Bank's financing policy. In addition, the BNDES reinforces
its environmental policy through internal efforts aimed at involving
the staff and the protocols in which the institution takes a public
commitment to promote development in harmony with the ecological
balance.
2. The BNDES has been accomplishing the safeguards
regarded as essential by most international institutions, evolving
side by side with international standards ruling environmental
practices.
3. The Bank has been steadily seeking to improve
both the environmental analysis criteria of projects that require
credit as financial support for companies that contribute to sustainable
development. In order to apply for financing from the BNDES, the
client is expected to meet a list of minimum requirements. Among
these, it is worth mentioning that the project must: (i) comply
with environmental legislation and (ii) comply with fiscal and
social obligations.
4. Investment in environmentally friendly infrastructure
projects and green technologies, such as energy efficiency and
solid waste management, has always played a major role at the
BNDES's lending. For example, the BNDES has already invested US$
609 million in 17 wind farms, US$ 262 million in 10 biodiesel
projects with capacity of 1.1 billion litres/year and US$ 12 billion
in 114 ethanol projects with capacity of 8 billion litres/year.
Besides, the institution is also starting to play an important
role in green lines of business that promote the sustainable use
of natural resources. Examples of key activities are: planted
forests for paper, pulp, charcoal, and timber, native forest management
for timber and non-timber products, CDM (clean development management)
projects, power efficiency, and rehabilitation of degraded areas.
5. The BNDES' Environmental Policy guidelines
are as follows: encouragement of the use of cleaner technologies
and the increase of power efficiency; development and permanent
improvement of tools to assess environmental credit risk and for
environmental analysis of projects; efforts to prevent and mitigate
environmental damage; incentives to implement environmental friendly
products and processes throughout the production chain; promotion
of the continuous development of the environmental awareness at
the BNDES; strengthening of information on the energy and environmental
profile of economic sectors and the evolution of technological
development; consideration of Ecologic-Economic Zoning in procedures
related to the BNDES' project financing and support for farming
and forestry projects related to the opening of new areas only
when in compliance with those criteria.
6. The most common types of financial support
are: (i) financing lines (refundable and non-refundable), which
are permanent in nature and which can be granted at any time;
(ii) programs, which have resource allocation and/or expiry dates
and (iii) equity funds managed by the BNDES.
7. Two examples of credit lines are BNDES Forestry
- a credit line aimed at the reforestation, conservation and forest
recovery of degraded or converted areas and sustainable use of
native areas through forestry development - and PROESCO - aimed
at projects that contribute to power efficiency. Two examples
of programs, in turn, are BNDES Forestry Compensation - that provides
support for the regularization of damage to the legal reserves
on rural properties earmarked for agribusiness, as well as for
preservation and appreciation of native forests and remaining
ecosystems - and BNDES Proplastic - which consists in support
for investments entailing rationing of natural resources, clean
development mechanisms, management systems and the recovery of
environmental damage, as well as finance projects and programs
for social investments carried out by companies in the plastic
production sector.
8. The BNDES is the manager of the Amazon Fund,
created in 2008 to raise donations earmarked for non-refundable
investments in preventing, monitoring and combating deforestation,
in addition to the conservation and sustainable use of the Amazon
biome forests, one of the richest areas on the planet in biodiversity
and natural resources. The Amazon Fund's main purpose is to promote
the protection of this heritage and the sustainable development
of the area. In addition to raising funds and selecting projects,
the Bank monitors progress after they have been contracted, in
areas such as: public forest management and protected areas; controlling,
monitoring and environmental inspection; sustainable forestry
management; and economic activities developed from the sustainable
use of the forest. Finally, not only donations, but also net gains
from investments add to the Fund's pool of resources.
9. The BNDES' Rainforest Initiative also comprises
a selection of projects to allocate non-refundable financial resources
from the Social Fund for the reforesting of areas with native
species. The BNDES' Clean Development Fund, in turn, offers support
for companies and projects that potentially generate Certified
Carbon Reductions, through stakes in companies' capital. Finally,
the Investments and Participations Fund Forestry consists in an
investment fund for stakes in companies and/or projects focused
on forestry assets. By the way, these funds embody a rather new
perspective according to which the environmental matter is at
the hub of the Bank's financial activity, being the very source
of return within the project.
10. When it comes to environmental protocols,
the BNDES is signatory of the International Declaration, made
by Financial Institutions on the Environment and Sustainable Development,
and a member of the United Nations Environmental Program - Financial
Initiative (UNEP-FI), keeping itself up-to-date on modern environmental
and sustainability practices within banking operations. In 2008
in Brazil, the BNDES signed the Protocol of Intentions for Social-Environmental
Responsibility - Green Protocol - also signed by other public
Brazilian bank institutions and the Ministry of Environment. In
that document, the signatory banks recognize their role in the
pursuit for sustainable development and plan to employ exemplary
bank policies and practices that promote the type of development
that does not undercut future generations' needs. Additionally,
in order to disseminate knowledge on the environment and reinforce
the commitment of the technical body to environmental issues,
the BNDES set up a permanent Working Group, the Social-Environmental
Working Group, as a discussion forum for the issue. Participants
work as links between several sectors of the Bank and the social-environmental
units, and are attributed with the task of formulating and monitoring
the BNDES' Environmental Policy.
1 November 2010
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