The Green Investment Bank - Environmental Audit Committee Contents

Written evidence submitted by the Brazilian Development Bank


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.


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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