Central Bank launches environmental sustainability agenda
The Central Bank (BC) launched on Tuesday (8) a set of social and environmental responsibility actions. Actions include internal campaigns and creation of a credit line.
The sustainability dimension was inserted in the BC # institutional agenda and includes everything from internal environmental awareness campaigns, incorporation of climate risk scenarios in BC stress tests, to the adoption of more comprehensive measures, such as the creation of a sustainable liquidity financial line for banking institutions.
During the presentation, BC President Roberto Campos Neto highlighted the centrality of the environmental issue to the sustainability of the financial system itself. “The environmental issue is extremely important and arouses great interest in society. The environmental issue was definitely on the agenda, ”he said.
“In the sustainability dimension, we will deal with the environmental issue from a financial point of view. We are going to talk about promoting sustainable finance, adequate management of socioenvironmental and climatic risks, integration of sustainable variables and other elements that affect decision-making by the Central Bank ”, he added.
According to the BC Director of International Affairs, Fernanda Nechio, among the measures to be adopted internally by the BC are campaigns to encourage the use of bicycles, the adoption of a free ride, reduction in the use of plastics, recycling and selective collection. The theme should also be part of the Economy Museum, maintained by the institution.
Regarding general actions, the director announced the creation of a sustainable liquidity financial line for financial institutions, with operations or a private credit security as guarantee. In the case of international reserves, sustainability criteria will be included for the selection of counterparties in the management of assets and for the selection of investments.
The BC also reported that it will implement recommendations from the “Task Force on Climate-Related Financial Disclosures” (TCFD, in English), which gathers guidelines for companies and financial institutions on the disclosure of information regarding the financial impacts of climate change on their Business. In addition, the BC # agenda provides for an improvement in the approach to risk management and the preparation of an annual report on socio-environmental risks for the BC.
Green Bureau of Rural Credit
The BC’s new sustainability agenda also includes the creation of a green rural credit bureau. In practice, the bureau will replace the BC’s Rural Credit and Proagro (Sicor) Operations System, in an open banking format, in which customer data is open for consultation by different financial institutions.
According to BC regulation director, Otávio Damaso, the bureau will incorporate criteria that identify operations with green characteristics and will also cross-reference information such as georeferencing data.
“We will be able to identify overlap with areas of environmental preservation, overlap with areas of indigenous lands, and this criticism will occur when the credit operation is contracted. So if there is any overlap, the operation itself will not be able to be performed because it will have a lock, ”he said.
Also according to Damaso, the goal is to increase the contracting limits for rural credit operations that meet sustainability characteristics by up to 20%.
For the president of the Brazilian Federation of Banks (Febraban), Isaac Sidney, it is necessary to channel more resources to finance a transition to a green economy. “In December last year, we reached 22% of the credit portfolio balance for the sectors that contribute to the green economy chain,” he said.
Regarding the burning and deforestation in the Amazon, Sidney expressed concern and stated that the topic “cannot be another chapter apart”, as “it is at the center of a great competitive advantage” for Brazil.