Social, Environmental and Climate Risk Management
ABC Brasil recognizes the importance of the responsibility to evaluate the counterparty, in order to identify and mitigate possible social, environmental and climate risks.
The governance of social, environmental and climate risk management is aligned with the strategic objectives, outlined by the Bank’s Social, Environmental and Climate Responsibility positioning, explained through its Policy (PRSAC).
The assessment of social, environmental and climate risk is linked to the authority of the Credit Committee, which is ultimately responsible for approving the conditions of the Bank’s relationship with its clients.
Social, Environmental and Climate Risk has the characteristic of being transversal to other risks. Present mainly because of the activities of its clients and their social, environmental and climate impacts. Such impacts, if not properly managed, can trigger compensation for damages or payment of fines, delay or interrupt ongoing projects, adaptation of your business or even affect customers’ ability to pay, and may reflect on credit risk, legal risk, reputational risk, market and liquidity risk, operational risk.
In addition, the Bank must also demonstrate its diligence in assessing these relationships and understands that for adequate management of social, environmental and climate risks, there must be appropriate Governance.
Social, Environmental and Climate Risk Analysis Process
ABC Brasil has a social, environmental and climate risks area, responsible for establishing guidelines and methodologies for assessing social, environmental and climate risks and acts as a technical-advisory area in carrying out specific assessments.
Commercial managers, as those primarily responsible for relationships, must understand their clients’ social, environmental and climate risks and how these may impact the bank, in addition to closely monitoring relevant information about changes in such risks. This process of integration with social, environmental and climate risks is considered in Commercial Onboarding. In addition, it prepares content and applies training to the Credit and AML areas involved in the process. The area also supports the Legal Department in the preparation of social, environmental and climate clauses, since all our clients have these clauses in their contracts.
The social, environmental and climate risk assessment (RSAC) is an integral part of the process of granting credit to clients, using data captured in official public databases, information in the media and provided by clients. The implemented methodology for assessing the RSACs includes risk profile analysis based on an internal social, environmental and climate rating process that is executed by the Credit team, with technical-advisory support to the Social, Environmental and Climate Risk area in identified cases of greater complexity.
In addition, ABC Brasil has instituted a Prohibited List with sectors and situations that the bank does not operate.
Click here to know our Prohibited List.
In the infographic below, you can see the steps of the RSAC evaluation process:
- ALM – Anti-money laundering area
- RSAC – Socio-Environmental and Climate Risk area.
- QSAC – Socio-Environmental and Climate Questionnaire applied to clients with activities with High Climate Exposure
Learn about the Governance of Social, Environmental and Climate Risk Management in our GRSAC Report: