Corporate responsibility

Environment

Financiación sostenible

Governance of ESG (Environmental, Social and Governance) risk management


General principles

CaixaBank manages its business and its products and services within the framework of its commitment to respect people and the environment. 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 that the procedures and tools for identifying, assessing and following up on the environmental risks derived from its activity with clients and transactions are applied and integrated in the standard risk, fulfillment and operations processes.

The company has a specialised environmental risk management team. Environmental risk management includes the following action points:

  • Define and manage an internal environmental risk management plan in keeping with the Group's strategy.
  • Define and manage the implementation of a framework for granting and managing industry policies that allow us to maintain a risk profile in keeping with this strategy.
  • Carry out the follow-up on the activities and operations with potential significant impact on environmental risk.
  • Encourage environmental risk mitigation practices assumed by its portfolios or activities as a whole (such as, inter alia, green bond issue).
  • Promote the development of systems to identify and measure its exposure to environmental risk, in accordance with the evolution of the legal framework, social sensitivity to these risks and best market practices.



Environmental Risk Management Committee

It is the most senior specialised executive body at CaixaBank when it comes to environmental risk management and reports to the CaixaBank Management Board.

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.



Transaction Appraisal Unit

This group constitutes the operating unit specialised in environmental risk to support the company in the daily decision-making processes linked to the ordinary business of granting risks, and informs the Environmental Risk Management Committee.

The group is made up of environmental risk specialists representing the Business, Risks and Corporate Responsibility areas.

Its key role is to issue a diagnosis, report or explanation with respect to the potential environmental risk level provided that it is required to do so and, particularly, in granting new asset operations referring to activities and sectors included in the Environmental Risk Management Policy.

Access to Environmental Risk Management Policy section



Reputational Risk Support Service

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



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

Project financing: Equator Principles

What are the Equator Principles?

The Equator Principles are a set of ten guidelines under which the financial institutions that adopt them voluntarily undertake to assess and take into consideration the social and environmental risks associated with the investments they finance within the field of development, in order to ensure the sustainable nature of the operations being financed.


Who has signed up to them?

These Principles were established in 2003 with the support of the International Finance Corporation (IFC) attached to the World Bank. Up to the end of August 2016 they had been adopted by 84 institutions. All of them collaborate in promoting best practices, in order to ensure standards improve, and also prepare an annual report on its application.

What is the commitment?

In accordance with the Equator Principles, CaixaBank goes through different phases when assessing projects:


1. The potential social and environmental risks and impacts of the projects are assessed, which are subsequently classified into three categories: A, B or C, according to the standards of the International Finance Corporation, IFC, attached to the World Bank Group.

A: projects with potential significant adverse environmental and social impacts that are considered irreversible or unprecedented.

B: projects with potential limited adverse environmental and social impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures.

C: projects with minimum social or environmental impacts or that have no adverse impact, including certain projects carried out by financial intermediaries with minimum risks or without risks.


2. Once classified, an independent expert must confirm that the projects meet the requirements of the Principles. For those projects with a higher foreseeable impact, category A or B, these requirements include a social and environmental assessment and a specific action plan, related to the potential risks and impacts, which must be followed.


3. If the project is economically viable and these risks and impacts are considered acceptable and feasible, the loan is agreed. In the case of category A projects, or category B projects for non-designated countries, the loan conditions require the borrower to contract an independent consultant to monitor the project until start up and to review the project's environmental and social monitoring, control and follow-up reports, in order to guarantee all the Principles are fulfilled.


By adopting these guidelines, CaixaBank undertakes to apply them to all project finance in which it participates and that require an overall financing higher than ten million dollars, regardless of the sector and the place in the world in which they are situated. Similarly, since 1 January 2014 they have been applied to all corporate loans linked to projects with an overall amount that is higher than 100 million dollars in which CaixaBank has a stake of at least 50 million dollars.

In accordance with these Principles, to be approved, projects need to be assessed positively with social and environmental factors incorporated in the analysis, as per certain standards established by the International Finance Corporation (IFC).

More information on the IFC

What is project finance?

This is a system to fund projects requiring a very high investment with certain predictable and sustainable expectations of future revenue generation to allow the loan to be repaid. In addition, the assets that have been financed with the loan serve as a repayment guarantee. These characteristics allow the projects to receive a specific financing that is generally provided by several companies. Some examples of these kinds of projects are motorways, telephone networks, etc.

 

Management of social and environmental risk in financing projects under the Equator Principles

CaixaBank's activity must be coherent with its corporate values, its codes of conduct and general risk principles. Some of the sectors in which CaixaBank operates could have a significant environmental impact. For this reason, in accordance with a rigorous and responsible decision-making process, CaixaBank believes it is essential to identify, assess and manage the environmental risk associated with its activity.

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 €7 million.
  • Corporate loans linked to investment projects with an overall amount of at least €70 million and in which
  • CaixaBank's individual commitment is at least €35 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 €7 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.

Application by CaixaBank

  • Rejects 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.
  • 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 categories A, B and C depending on the potential risks and impacts detected during the due diligence process, which involves teams from the sales and risk areas 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 financing analyzed?

See 2019


Number of financed projects in 2019

 

Financed operations (units) Financed operations (€MM) 1
A Category (projects with potential enviromental and social risks) 2 313
B Category (projects with limited potential ESG risks which are easy to mitigate) 13 1.099
C Category (projects with potential impact ESG minimum or without adverse impacts) 0 0
TOTAL 15 1.412

1. The reflected amounts can vary because of the change of conditions in the loans granted in closed dates to the reporting.

In 2019, fifteen projects were assessed in accordance with the Equator Principles entailing total investment of € 16,190 million, of which CaixaBank contributed more than € 1,412 million. Two projects were classified under category A and thirteen were classified under category B. These assessments have been carried out with the assistance of an independent consultant.

Project Finance A B C
2 12
Sector Infraestructures 2
Oil&Gas 1
Gas 1
Power 1 9
Wind 1 6
Photovoltaic 3
Others 1
Region Europe, Middle East & Africa
Europe 7
Americas 2 3
Asia Pacific 2
Country designation Designated Country 2 10
Non-Designated country 2
Independent review Yes 2 12
No

Project-related corporate loans A B C
1
Sector Others 1
Region Americas 1
Country designation Non-designated country 1
Independent review Yes 1

 

Global volume by sector and category (in million euros)


Previous years of Project financing: Equator Principles

See 2018


Projects Evaluated in 2018 in Accordance with Equator Principles

Number of financed projects in 2018

 

Financed operations (units) Financed operations (€MM) 1
A Category (projects with potential impact ESG significant and hardly mitigables) 1 99
B Category (projects with potential impact ESG limited and easily mitigables) 7 504
C Category (projects with potential impact ESG minimum or without adverse impacts) 0 0
TOTAL 8 603

1. The reflected amounts can vary because of the change of conditions in the loans granted in closed dates to the reporting.

In 2018, eight projects were assessed in accordance with the Equator Principles entailing total investment of € 10,626 million, of which CaixaBank contributed more than € 603 million. One project was classified under category A and seven were classified under category B.

Project Finance A B C
1 7
Sector Infraestructures 3
Oil&Gas 1
Gas 1
Power 4
Wind 3
Photovoltaic 1
Region Europe, Middle East & Africa 1 7
Europe 1 7
Country designation Designated Country 1 7
Non-Designated country
Independent review Yes 1 7
No

 

Global volume by sector and category (in euros)

Note: data updated as of May 2019

See 2017

In 2017, seven projects were assessed in accordance with the Equator Principles entailing total investment of € 2,793 million, of which CaixaBank contributed more than € 332 million. None was classified under category A, five were classified under category B and one under category C.

Projects evaluated according to Ecuador Principles classified as B:

HENVEY - GROUP PATTERN ENERGY

BEATRICE

MAINSTREAM

Number of financed projects in 2017

 

Project Finance A B C
0 6 1
Sector Infraestructures 1
Oil&Gas 1
Gas 1
Power 5
Wind 4
Photovoltaic 1
Others
Tourism
Region Europe, Middle East & Africa 4 1
Europe 1 1
Américas 2
América del Sur
América del Norte 2
Country designation Designated Country 6 1
Non-Designated country
Independent review Yes 6 1
No

 

Global volume by sector and category ( in euros)

 

Note: as of December 2017. Figures for 2017 were updated down the line due to the delays in collecting the contractual documents relating to the transactions.

See 2016

In 2016, twelve projects were assessed in accordance with the Equator Principles entailing total investment of € 4,800 million, of which CaixaBank contributed more than € 721 million. None was classified under category A, ten were classified under category B and the remaining two under category C.


Number of financed projects in 2016

 

Project Finance A B C
0 10 2
Sector Infrastructure 4 1
Power 5
Wind 4
Transmision 1
Oil&Gas 1
Gas 1
Others 1
Tourism 1
Region Americas 8 2
South America 2 1
North America 6 1
Europe, Middle East & Africa 2
Europe 2
Country
Designation		 Designated Country 7 1
Non-Designated Country 3 1
Independent
Review		 Yes 10 2
No

 

Global volume by sector and category


Note: as of April 2017

See 2015

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 Finance A B C
0 12 2
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

 

Global volume by sector and category


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 Finance A B C
1 4 4
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.



Environmental Risk Management Policy

Some of the sectors in which CaixaBank operates could have a significant environmental impact. For this reason, in accordance with a rigorous and responsible decision-making process, CaixaBank believes it is essential to identify, assess and manage the environmental risk associated with its activity.

Managing the environmental risks integrating ESG (Environmental, Social and Governance) risks is one of the main lines of action of the Company's environmental strategy. CaixaBank therefore developed an Environmental Risk Management Policy in 2018 that regulates the financing of certain companies and projects representing a potential ESG risk. The main objective of this policy is to determine a framework of global principles forming the foundations of all actions that are related or that have an identified impact on potential ESG risks. The sectors that have been taken into account in this policy are:

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


Access to Environmental Risk Management Policy section


Task Force on Climate-related Financial Disclosures (TCFD)

With the view to complying with the recommendations of the Task Force on Climate-related Financial Disclosures (TFCD), CaixaBank has identified its portfolio exposure to carbon-intensive sectors1, representing 0.94% of its total assets. In addition, CaixaBank is currently working to identify its portfolio exposure to green sectors.

[1] Data on CaixaBank Group's carbon-intensive equity, fixed income and credit exposure (including BPI). This includes exposure to
fossil-fuel-based power generation sectors (coal, oil and gas) and utilities, based on the recommendations of the FSB Task Force on Climate-related Financial Disclosures. Financial Disclosures of the FSB. Some exposures may contain a mix of power generation that includes renewable energies.


United Nations Principles for Responsible Investment



CaixaBank's pension plan management company (VidaCaixa) and collective investment institution management company (CaixaBank Asset Management) adhere to the United Nations Principles for Responsible Investing (UNPRI) and manage their portfolio in accordance with 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).

               

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