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Corporate responsibility

Environmental sustainability

Sustainable finance

Enviromental and social risk management

CaixaBank, within the framework of a rigorous, responsible and transparent decision-making process, is highly conscious of the social and environmental implications of its loans policy. Therefore, it continuously strives to optimise the risk/return ratio and avoid, minimise, mitigate or remedy,insofar as possible, those factors that could entail a risk for the environment or community.

In general, CaixaBank's activity should be consistent with its corporate values, internal rules of contact and main risk principles. Specifically, project financing.


Equator Principles

In 2007, CaixaBank adopted the Equator Principles, a framework for determining, assessing and managing environmental and social risk in project financing. Accordingly, an analysis is required of the potential environmental and social risks of the projects, pursuant to the standards established by the International Finance Corporation (IFC) for:

  • Project finance entailing an overall investment of more than US $10 million.
  • Project-related corporate loans in excess of US $100 million overall.
  • Project finance bridge loans and advisory services.
  • CaixaBank also voluntarily applies this procedure to project bonds exceeding €7 million.
  • Since 2011, an internal procedure has been in place for syndicated operations for projects exceeding €7 million and, since 2015, it has been extended to project-related corporate loans in excess of €5 million.

In line with these Principles, for these projects to be approved, they must have a positive evaluation, which means writing social and environmental factors into the analysis:

  • Projects with potentially high and irreversible risks and impacts for which a viable action plan cannot be foreseeably established, or those that contradict corporate values, are rejected.
  • In all other cases, an independent external expert evaluates the customer's environmental management plan and system. Projects are then classified in one of three categories (A, B or C), based on the potential risks and impacts detected during the due diligence.

Projects classified under category A, and some of those under category B, may have potentially significant adverse risks. In these cases, an action plan is designed to help prevent, minimise, mitigate and offset adverse social and environmental impacts.

What are the Equator Principles?

The Equator Principles are a set of ten guidelines, by virtue of which the financial entities that adopt them undertake voluntarily to evaluate and to take into consideration the social and environmental risks of their investments in the development field, in order to ensure the sustainable nature of the operations being financed.

Who has signed them?

These Principles were established in 2003 with the support of the International Finance Corporation (IFC) of the World Bank. By August 2016, 84 institutions had adopted them. They all work together to spread the best practice and so ensure that standards improve. They also draw up an annual report on the application of the Principles.

What is the commitment?

For CaixaBank, the evaluation of projects under the Equator Principles runs through several stages:

  • In the first place, the possible social and environmental risks and impact of the projects are evaluated. Subsequently, these are classified into three categories, A, B or C, according to the standards of the IFC, member of the World Bank Group.

What are the categories?

  • A: projects which may have adverse and significant social or environmental impact and which are considered irreversible or unprecedented.
  • B: projects with limited social or environmental impact that may be adverse, which are few in number and generally confined to specific places. These are reversible and easily tackled by measures to reduce their impact.
  • C: projects with social or environmental impact that is minimal or with no adverse effects, including certain projects of financial intermediaries with minimum risk or without risks.

Further information on the Performance Standards of the IFC

  • Once classified, an independent expert has to confirm that the projects comply with the requirements of the Principles. For those projects with a greater foreseeable impact, in categories A or B, these requirements include a social and environmental appraisal and a specific plan of action on the possible risk and impact, which must be followed.
  • If the project is economically viable and these risks and impact are considered acceptable and can be assumed, the loan is formalized. In the case of category A projects, or category B ones for Non designated countries with low income, the loan conditions oblige the recipient of the loan to hire an independent consultant who will monitor the project until it is started up and will review the reports on the social and environmental supervision, control and monitoring of the project,
    in order to ensure that all the Principles are complied with.

In consequence, CaixaBank does not participate in those projects in which the loan recipient does not wish to, or is unable to, comply with the Equator Principles or with the internal policies of  CaixaBank on sustainable financing, if the latter requirements are stricter.

By adopting these guidelines, CaixaBank undertakes to apply them to all the project financing in which it takes part and that require overall financing of over US$10, regardless of the industrial sector or the place in the world where it is located. In line with these Principles, for these projects to be approved, they must have a positive evaluation, which means writing social and environmental factors into the analysis, in line with the standards set by the International Finance Corporation (IFC). From January, 2014, CaixaBank applies them to project-related corporate loans with total project capital costs of US$100 million or more and CaixaBank’s individual commitment is at least US$50 million.


What is project financing?

It is a system of financing for projects needing very high investment, and which are expected to create predictable and sustained future income, which will permit the return of the loan. In addition, the very assets financed with the loan serve as security on payment. These characteristics allow projects to receive specific financing that is usually provided by several entities. Examples of this kind of project are motorways, telephone networks, etc.

 
Project-related environmental and social risks management

The aim of  CaixaBank is that these projects develop in a socially responsible way and that the best environmental practices available are employed.

Any projects that are identified in a preliminary analysis as having potential significant risks and irreversible impacts for which a viable action plan cannot be established, or those that contravene CaixaBank’s corporate values, are not considered and are not assessed in greater depth. The bank’s participation in the financing of any such projects is rejected from the start.

In 2015, fourteen projects were assessed in accordance with the Equator Principles entailing total investment of € 17,808 million, of which CaixaBank contributed more than € 636 million. None was classified under category A, twelve were classified under category B and the remaining two under category C.


Number of financed projects in 2015

 

Project FinanceABC
140122
Sector Infrastructure 3 1
Power
Sun Power 1 1
Wind 5
Transmision 1
Oil&Gas
Gas 2
Region Americas 7
Europe, Middle East & Africa
Europe 5 2
Country
Designation
Designated Country 12 2
Non-Designated Country
Independent
Review
Yes 12 2
No

 

CaixaBank's contribution by sector and category  (in euros)


Note: as of March 2016.

See 2014

In 2014, nine projects were assessed in accordance with the Equator Principles entailing total investment of € 2,506 million, of which CaixaBank contributed more than € 270 million. One was classified under category A, four under category B and the remaining four under category C.


Number of financed projects in 2014

 

Project FinanceABC
9144
Sector Infrastructure 1 2
Power
Cogeneration 1
Wind 2
Others
Chemicals 1
Real Estate & Tourism 2
Region Americas 1
Europe, Middle East & Africa
Europe 1 3 4
Asia Pacific
Country
Designation
Designated Country 3 4
Non-Designated Country 1 1
Independent
Review
Yes 1 4 4
No

 

Global volume by sector and category (in thousand euros)


Note: as of February 24th 2016.

As part of its commitment to the environment, CaixaBank introduced an internal procedure in 2011 to assess environmental and social risks associated with syndicated transaction exceeding € 7 million relating to investment projects. In 2014, five syndicated deals were evaluated for a combined amount of over € 360 million. Of these, two were classified under category B and the other three under category C. 

 

More information on the Equator Principles