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 climate and 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 climate and environmental risk management which includes the following courses of action:

  • Define and manage an internal climate and environmental risk management plan in accordance with the Group's strategy.
  • Define and manage the implementation of a framework of 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.

Additionally, there are specialized personnel dedicated to managing sustainability risks along the 3 Lines of Defense, including the Business, Risk, Non-Financial Risk and Audit functions.

Sustainability Committee

The highest executive body specialized in sustainability risk management, including environmental and climate risk, is the Sustainability Committee, whose creation was approved in April 2021 by the Management Committee.

More about the Sustainability Committee

Sustainability Division 

In March 2021, the Sustainability Division was created. Within this, the Sustainability Risks Department assumes the functions that the Corporate Environmental Risk Management Division (DGRMA) had performed since 2018: define the principles of action in relation to the management of ESG risks and advise on their application criteria, validating those criteria and transferring them to the analysis tools.

To strengthen climate risk management, in January 2022 the Climate Risk Department was created within the Sustainability Division. 

Reputational risk support service

The Reputational Risk Support Service contributes to compliance with responsible policies and reputational risk management, providing support to the commercial network and other corporate departments (Risks and Compliance). It parses queries about potential operations that may violate the codes of conduct or that may have an impact on CaixaBank's reputation. External tools provided by reputational risk analysis providers are used for the service.

The activity is periodically reported to the Sustainability Committee and those issues that require a decision at a higher level are raised.

Queries resolved in 2022

235 queries resolved in 2022

62 %
related to customers and operations with potential reputational impact

38 %
queries related to the Corporate Sustainability/ESG Risk Management Policy

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

[an error occurred while processing this directive][an error occurred while processing this directive]Operating principles of the Corporate Policy for managing sustainability/ESG risks 

At CaixaBank, we have laid down a global framework for managing sustainability/ESG risks, which is one of the core lines of action of our strategy for managing this type of risk.

The Principles of Action of the Corporate Sustainability/ESG Risk Management Policy apply to the customer registration processes, the approval of corporate or project finance transactions and own-account investment in fixed-income securities and equities. They lay down a series of general and sector exclusions on activities that could have a material impact in this field, as well as the requirements under which CaixaBank will not assume risk.

The general exclusions are applicable to customers and financing and investment transactions in fixed income and equities in any sector and essentially refer to the non-violation of human rights. Sector exclusions apply to sectors with greater potential exposure to sustainability risks.

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

The analysis of sustainability risks is integrated into customer, company and corporate credit processes, and in the processes of investment in securities, through questionnaires for the assessment and classification of customers and transactions. The analysis in customer onboarding corresponds to specialised business teams, while analysis related to transactions is conducted from the Risk areas both in the Risk Admission Centres themselves and, where applicable, in the Corporate Environmental Risk Admission Directorate.

The company is implementing the Corporate Sustainability/ESG Risk Management Policy, approved by the Board of Directors in March 2022. Since its approval and to date, CaixaBank has been analysing its portfolio of customers with higher inherent ESG risks in order to comply with its ESG risk management commitments, especially those exclusions included in the policy relating to the defence sector, high environmental risks, and human rights risks (including employee health and safety), among others. In other words, a holistic due diligence analysis of customers is being carried out from an ESG perspective.

Accordingly, in the first half of 2023, CaixaBank began a process of prioritising the customers in its portfolio, starting with customers linked to the defence sector and customers with tax domiciles in high-risk countries in terms of sustainability.

In addition, when an asset transaction is requested and provided that the requirements established for the implementation phase applicable at any given time are met, an environmental and social risk analysis is carried out. This includes not only aspects strictly defined in the policy, but also others related to the company's ESG monitoring procedures, the existence or otherwise of environmental and social issues, the decarbonisation strategy, and compliance with the Equator Principles, where applicable. As a result of this analysis, an environmental risk sanction is issued, which may be decisive for the approval of the risk.

Access to Operating principles of the Corporate Policy for managing sustainability/ESG risks 

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.

Project financing: Equator Principles

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

Climate and Environmental Risk Management

At CaixaBank we actively manage environmental risks and those associated with climate. Based on the evaluation of the materiality of ESG risks in their interrelation with traditional risks, in the phased deployment of ESG risk management we have prioritized climate risks.

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.

ESG Risk (sustainability) is considered at CaixaBank as a transversal factor affecting various risks in the Catalog (credit, reputational and other operational risks), adding mentions of climate change and other environmental risks in the definitions of the legal and regulatory risk area. There is no explicit mention of liquidity and market risks given the low level of materiality applied to them, but in any case it has been assessed that the stress tests carried out are of sufficient magnitude to reflect impacts in these areas of climatic origin.

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). Additionally, at CaixaBank we have developed qualitative and quantitative analyzes for physical and transition risk.

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.

During 2022, CaixaBank issued 2 green bonds, in addition to the 4 green bonds issued in 2021 and 2020. The €2,000m raised between these two bonds are in addition to the €3,582m previously issued.

The total amount acquired through these funds have been allocated to funding projects that promote four of the Sustainable Development Goals (SDG): number 6, Clean Water and Sanitation; number 7, Affordable and Clean Energy; number 9, Industry Innovation and Infrastructure; and number 11, Sustainable Transport Systems.

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 

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. 

Since 2019, at CaixaBank we have actively participated in the UNEP FI pilot project to implement the TCFD recommendations in the banking sector (TCFD Banking Pilot Phase II and III). The case studies prepared by CaixaBank in the framework of the pilot have been included in the reports “Pathways to Paris. A practical guide to transition scenarios for financial professionals” and “Leadership strategies for client engagement: advancing climate-related assessment”, on the UNEP FI website.

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. 

Net Zero Banking Alliance

In April 2021, CaixaBank signed up -as a founding member— to the Net Zero Banking Alliance (NZBA), a partnership driven by UNEP FI whereby we commit to achieve net zero emissions by 2050 and to set interim decarbonisation targets by October 2022. Signing the NZBA implies a boost to ambition with respect to commitments previously made by CaixaBank, such as the Collective Commitment to Climate Action, since it requires alignment with the goal of limiting the temperature increase to 1.5°C with respect to pre-industrial levels.

As steps prior to setting objectives, the following milestones were reached:

  • Adherence to the Partnership for Carbon Accounting Financials (PCAF). PCAF is a global partnership of financial institutions whose goal is to establish an international standard for measuring and disseminating financed greenhouse gas (GHG) emissions.
  • Calculation of emissions financed (Scope 3, category 15 of the GHG Protocol). Progress has been made in estimating the financed emissions based on the PCAF methodology for mortgage portfolio assets, debt securities, equity instruments and corporate loans and advances.
  • Assessment of the materiality of ESG risks, geared towards the transitional climate risks of the most potentially affected sectors on the basis of detailed heatmaps. This analysis, together with the emissions calculation and sector breakdown, helped to determine the sector portfolios to be prioritized.

We have set intermediate decarbonisation targets for 2030 for our financing and investment portfolios, specifically in the sectors with the highest intensity of greenhouse gas emissions (electricity, oil and gas, automotive and iron and steel).

Additionally, we will stop financing companies involved in thermal coal activities (those clients whose revenues from thermal coal mining and/or coal-fired power generation exceed 5% of the total), reducing our exposure to zero by 2030 (phase-out).

Learn about our intermediate decarbonisation targets

Access the Climate Report

In keeping with our commitment under the NZBA framework, by April 2024 we plan to establish concurrent objectives for other sectors thar are heavy emitters of greenhouse gases, both in our credit financing and investment portfolios, as well as for subsidiaries with material exposures in these priority sectors.

Access to Net Zero Bankin Alliance 

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 Climate Action 100+