ESG risk management

ESG risk management and governance (Environmental, Social and Corporate Governance)

CaixaBank manages its business, products and services within the framework of its commitment to respect people and local communities. It coherently supports the most environmentally friendly initiatives and projects that contribute to prevent, mitigate and respond to climate change.

One of CaixaBank's objectives is to apply and integrate its procedures and tools for identifying, assessing, and following up on the environmental risks derived from its activity with customers and transactions to be applied and integrated in its standard risk, compliance and operations processes. 

The company has a specialised team for environmental risk management which includes the following courses of action:
Define and manage an internal environmental risk management plan in accordance with the Group's strategy.

  • Define and manage the implementation of a frameworkof sectorial concessions and management policies to allow us to maintain a risk profile in line with said strategy.
  • Monitor actions and operations with a significant potential impact on climate and environmental risk.
  • Incentivise practices to mitigate climate and environmental risks taken on as a result of its portfolios or actions across the board.
  • Promote the development of systems to identify and measure its exposure to climate and environmental risk, in accordance with the regulatory framework, social awareness of these risks and the best market practices.

Environmental Risk Management Committee

This is the highest-level body specialising in climate and environmental risk management. Its creation was approved by the Board of Directors in February 2019. It reports to the CaixaBank Steering Committee, it is chaired by the Chief Risk Officer, and it is made up of members of the Institution's Senior Management.

It is responsible for analysing and, where necessary, approving the proposals received from the different functional areas concerning the Bank's strategy and approach, while also identifying, managing and controlling the associated risks as a first line of defence.

Corporate Environmental Risk Management Division

The Corporate Environmental Risk Management Division (DGRMA), which reports to the General Risk Management Department, is responsible for managing environmental and climate-related risk. The DGRMA coordinates the execution of the Road Map and oversees the analysis of environmental risk within its risk concession processes.

Reputational risk support service

CaixaBank has a Reputational Risk Support Service that answers queries related to:

Queries resolved in 2020

279 queries resolved in 2020

37 %

63 %
Other responsible policies and operations with a potencial reputacional impact

6 Operations submitted to the Corporate Responsibility and Reputation Commitee for sanctions

ESG (Environmental, Social and Corporate Governance) and climate-related risk admission procedures

Environmental risk management policy

Environmental Risk Management Policy

The policy establishes the framework of global principles for managing environmental risk. Environmental risk management comes under the umbrella of ESG risks (environmental, social, and corporate governance), and constitutes one of the main lines of action of the Environmental risk management strategy defined within CaixaBank.

With regard to the processes for taking on new customers and approving operations, the Environmental Risk Management Policy establishes a series of general and sectorial exclusions relating to activities that may have a significant environmental impact, establishing the requirements under which CaixaBank cannot take on credit risk. The sectors that the specific exclusions apply to are as follows:

  • Energy
  • Mining
  • Infrastructures
  • Agriculture, fishing, livestock and forestry

Environmental risk analysis is integrated to the lending processes for business and corporate customers through a questionnaire to evaluate and classify customers and operations. More complex operations are evaluated by specialised analysts from the Corporate Environmental Risk Management Division.

Access to the Environmental risk management policy 

Furthermore, in the framework of applying the Equator Principles, which CaixaBank has adhered to since 2007, a series of additional processes have been established in relation to ESG risk assessment.

630 applications assessed between the DCGRMA, RACs and BPI.

Project financing: Equator Principles

Scope of the management framework

Project finance is carried out under the Equator Principles, which CaixaBank has adhered to since 2007. As a result, an analysis of the potential environmental and social risks and impacts of the projects is required, carried out according to the standards established by the International Finance Corporation (IFC), for:

  • Financing projects and project financial advice services with a minimum investment of €10 million.
  • Corporate loans linked to investment projects with an overall amount of at least €100 million and in which CaixaBank's individual commitment is at least €50 million and the term of the loan is equal to or more than 2 years.
  • Bonds linked to projects with an amount equal to or more than €10 million.
  • Bridging loans with a term of less than 2 years that are to be refinanced through project financing or a corporate loan linked to a project, meeting the previously indicated criteria in each case.

Since 2011, CaixaBank has voluntarily applied the above-mentioned procedure to syndicated operations, with a term greater than or equal to 3 years and when CaixaBank's individual commitment is between €7 million and €35 million.

Additionally, since 2015 the procedure has been applied to other operations to finance investment projects with a minimum term of 3 years and a minimum amount of €5 million when the holder is a medium/large, large or very large entity.

Since October 1, 2020, V.4 of the Equator Principles has come into force, the most significant changes of which are:

  • Expansion of the scope of application, reducing the amount for corporate loans linked to projects to US $ 50 million, refinancing and project acquisitions are added as long as they meet certain requirements (the original project was financed under the Equator Principles, there are no material changes in the scope of the project and has not yet come into operation).
  • New aspects related to Human Rights and Climate Change are added.

CaixaBank is already applying these new criteria.

Application by CaixaBank

Any project entailing potentially significant and irreversible risks or impacts for which no viable action plan can be established, or which conflicts with corporate values is rejected. 

In other instances, an independent expert is appointed to evaluate each borrower's social and environmental management plan and system. The projects are classified into three categories, A, B and C, according to the potential risks and impacts detected in the due diligence process, with the participation of the teams of the commercial and risks department and external experts. 

Category A and certain Category B projects may have potentially significant adverse impacts. In these cases, an action plan must be drawn up to help prevent, minimise, mitigate and remedy the adverse social and environmental impacts.

How are environmental and social risks associated with project finance analysed?

Climate and Environmental Risk Management

In accordance with the best sectorial practices, the recommendations of the TCFD and the European Commission guidelines on non-financial reporting, CaixaBank is progressing in its management and analysis of environmental risks and risks derived from climate change, which are classified as physical risks and transitional risks. The former emerge as a result of climatic and geological events and changes in the balance of ecosystems, and can be gradual or abrupt. They can entail physical damage to assets (infrastructures, properties), disruptions in production or supply and/or changes in the productivity of economic activities (agriculture, energy production). Meanwhile, transitional risks are associated with the fight against climate change and the transition towards a low-carbon economy. They include factors such as regulatory changes, the development of alternative energy-efficient technologies, changes in market preferences or reputational factors associated to activities with a high impact. Since its participation in the second phase of the UNEP FI project in 2019 to implement the recommendations of the TCFD in the banking sector (TCFD Banking Pilot Phase II), CaixaBank is promoting the development of analyses of climate change scenarios.

CaixaBank actively manages environmental risks and risks associated with climate change through the different lines of action of its road map. 

Management of the credit portfolio seeks to align the indirect impact on climate change with risk appetite and with the commitment to its sustainability objectives. To do this, since 2018 it has measured lending exposure to economic activities considered carbon-intensive. The main metric is based on the definition suggested by the TCFD to facilitate their comparison and includes exposure to assets linked to the sectors of energy and utilities, excluding water and renewable energies (carbon-related assets, as defined in Implementing the Recommendations of the TCFD). 

Furthermore, exposure to the green portfolio is monitored. The EU Taxonomy being developed is the European standard for determining whether an economic activity significantly contributes to mitigating climate change without damaging the other environmental objectives of the EU. CaixaBank intends to apply this standard once it has been approved and is applicable. In this regard, CaixaBank joined the UNEP FI working group in 2019 to define a guide to adapt banking to EU taxonomy (High-level recommendations for banks on the application of the EU Taxonomy). Pending approval of the European Union Taxonomy on environmentally sustainable activities, CaixaBank aligns its definition to the CaixaBank Framework for issuing bonds related to Sustainable development goals, aligned with the Sustainable bond principles, Green Bond Principles and Social bond principles, approved by the CaixaBank Board of Directors. 

In 2020, climate risk has been included in the Corporate Risk Catalog as a level 2 risk of credit risk. Likewise, since 2018, environmental risk has remained a level 2 risk of reputational risk.

Furthermore, CaixaBank has been a signatory to the Green bond principles since 2015, established by the International Capital Markets Associations (ICMA). Since then, the Company has participated in the placement of green bonds for projects having a positive impact on climate change.

Access to the SDG Framework 

Task Force on Climate-related Financial Disclosures (TCFD)

Logo de Task Force on Climate-related Financial Disclosures

CaixaBank is committed to complying with the transparency recommendations of the TCFD, a working group of the Financial Stability Board whose objective is to increase the relevance of climate risks and opportunities through reporting, with the aim of boosting their consideration among participants in financial markets.

A summary of progress derived from the initiative is compiled each year in the CaixaBank Management Report. 

During 2019 and 2020, CaixaBank actively participated in the second UNEP FI pilot project to implement the TCFD recommendations in the banking sector (TCFD Banking Pilot Phase II). The case study prepared by CaixaBank in the framework of the pilot has been included in the report “Pathways to Paris. A practical guide to transition scenarios for financial professionals”, on the UNEP FI website.

We have confirmed our participation in phase 3 of the UNEP FI TCFD program, which is planned in 2021.

Access to the CaixaBank Management Report

Responsible Banking Principles (RBP)

On 22 September 2019, CaixaBank ratified its adherence to the Responsible Banking Principles of the United Nations, promoted by the UNEP FI. The signing of and compliance with the Principles are aligned with the commitment to 'Be pacesetters in responsible management and our commitment to society', a strategic line established in the Institution's 2019-2021 Strategic Plan. The objectives of the Responsible Banking Principles are:

  • Establish a framework for sustainable finance in the 21st century
  • Align the banking industry with the Sustainable Development Goals and the Paris Agreement
  • Allow banks to demonstrate and communicate their contribution to society
  • Promote the connection with customers, the establishment of specific objectives and transparency through public reporting 

Signing the Principles entails aligning strategy and management with the Sustainable Development Goals and the Paris Agreement, establishing objectives and reporting their state of progress annually. 

Collective Commitment to Climate Action of the United Nations

In December 2019, CaixaBank joined the Collective Commitment to Climate Action of the United Nations, a declaration created under the framework of the Responsible Banking Principles, with the objective for the financial sector to leverage their products, services, and relationships to facilitate the economic transition towards a sustainable model. The commitment aims to align the portfolios of financial institutions to finance a low-carbon economy, and to keep global warming below two degrees Celsius. 

In accordance with the text of the Agreement, signatory financial institutions are committed to focusing their efforts on the sectors that are most carbon-intensive and vulnerable to the climate in their portfolios, one of the key aspects of the climate transition. In addition, these entities will engage their clients into their own energy transition to contribute more effectively to the technologies necessary to achieving low carbon emissions in the real economy. 

In this regard, CaixaBank is driving multiple actions aimed at establishing objectives to align with the Paris Agreement.

Access to the Collective Commitment to Climate Action 

United Nations Principles for Responsible Investment

Logo de Principles for Responsible Investment

The pension plans management company (VidaCaixa) and the company that manages collective investment institutions of the Group (CaixaBank Asset Management) adhere to the Socially Responsible Investment Principles of the United Nations (UNPRI), and manage their portfolios under these principles. In addition, both entities adhere to the Climate Action 100+ initiative led by UNPRI, to drive the clean energy transition and help achieve the goals of the 2015 Paris Agreement (COP21).

Logo de VidaCaixa

Logo de CaixaBank Asset Management

Logo de Principles for Responsible Investment A+

Logo de Climate Action 100+

VidaCaixa is the only Spanish insurance company to have received the maximum A+ rating in sustainability from the United Nations.