Climate and Environmental Risk Management
At CaixaBank we actively manage environmental risks and those associated with climate through the different lines of activity of our Road Map.
In accordance with the best sectorial practices, the recommendations of the TCFD and the European Commission guidelines on non-financial reporting, at CaixaBank we are progressing in our 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.
Sustainability risk is already included in the Corporate Risk Catalogue as a cross-cutting factor in several of its risks (credit, reputational, other operational risks). Thus, since 2020, climate risk has been included as a level 2 risk of credit risk and, since 2018, environmental risk has been upheld as a level 2 risk of reputational risk. Furthermore, since 2021 climate risk has been included as a level 2 risk of operational risk.
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).
Through our participation since 2019 in the second phase of the UNEP FI project to implement the recommendations of the TCFD in the banking sector (TCFD Banking Pilot Phase II and III), at CaixaBank we promote the development of analyses of climate change scenarios, upon which we have continued to work since then. We have developed qualitative analyses for physical and transition risk, as well as quantitative transition risk analyses for the portfolio's most relevant sectors.
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. For the time being, Delegated Act 2021/2139 of the EU sustainability regulation is limited to the goals of mitigating greenhouse gas emissions and adapting to the vulnerability to the effects of climate change. The rest of the environmental goals envisaged by the Taxonomy have not yet been developed. As the regulations are developed, our commitment as a Group is to make them public with the best practices observed at any time.
In that regard, since 2019 we have been part of the UNEP FI task force to define guidelines for adapting banking to EU taxonomy (High-Level Recommendations for Banks on the application of the EU Taxonomy). Furthermore, in line with the technical criteria, operational and documentary criteria have been laid down for the classification of operations of the most relevant sectors in CaixaBank's portfolio and a project has been set up to implement the requirements in the processes and information systems.
In 2021, CaixaBank has issued 3 green bonds, besides the inaugural green bond issued in 2020. The €2,582m acquired through the three bonds issued in 2021 have been allocated to funding projects that promote two of the Sustainable Development Goals (SDG): SDG 7, affordable and clean energy, and SDG 9, industry, innovation and infrastructure. The portfolio of eligible green assets is made up of loans mainly destined to solar and wind renewable energy projects.
Furthermore, we have been signatories to the Green Bond Principles since 2015, established by the International Capital Markets Association (ICMA). Since then, we have participated in the placement of green bonds for projects with a positive climate impact.
Access to the SDG Framework