Promoting sustainable development, in a proactive way and in all the supported enterprises, is the main objective of BNDES’s Socioenvironmental Policy, focusing on an integrated concept of the economic, social and environmental dimensions.

The Socioenvironmental Policy defines the instruments and guidelines that support BNDES in its role to fulfill its Mission – to promote the sustainable and competitive development of the Brazilian economy, to generate employment and to reduce social and regional inequalities. In addition, the Policy establishes operating procedures in order to perform an efficient social and environmental analysis of projects applying for BNDES financing.

• Guidelines
• Instruments
• Operating procedures (granting financial support)
• Annex I

Guidelines

By fulfilling its Socioenvironmental Policy, BNDES believes that its financial support must conciliate its Operational Policy with the adherence to the applicable legislation, and also encourage the adoption of better environmental practices, within its role as a change agent.

The set of guidelines presented below describes how the BNDES system acts in the context of its social and Environmental Policy:

• To act in line with current Brazilian legislation and public policies, in particular with the provisions set out in the National Environmental Policy and, abroad, with the laws applicable in each country;
• to develop and refine financial products, methodology as well as analytical, monitoring and evaluation tools, on a permanent basis, that incorporate socioenvironmental criteria based on national and international references;
• to offer, when applicable, differentiated conditions of financial support to enterprises with projects with socioenvironmental complementary aspects as well as to enterprises that truly take environmental liabilities into account;
• to consider how social and environmental dimensions are dealt with as a strategic issue when analyzing financial support, both in asset management and risk analysis for beneficiaries and enterprises;
• to observe the recommendations and restrictions of ecologic-economic zoning and agroecological zoning, wherever applicable;
• to support agricultural and forestry enterprises related to opening new areas, only when in line with the ecologic-economic zoning;
• to observe the impacts of BNDES’s support in the job and consider its policies relating to human rights;
• to promote enterprises that support eco-efficiency, the adoption of sustainable social and environmental processes and products, the use of management systems for the entire production chain and the reduction of greenhouse gas (GHG) emissions;
• to promote and direct the adoption of preventive and mitigating actions to adverse social and environmental impacts;
• to permanently expand and update information regarding the impact patterns of socioenvironmental performance, energy and GHG emissions on the main economic sectors, as well as on the evolution of technological and innovative paths;
• to expand and update, on a permanent basis, knowledge concerning sustainable and responsible social and environmental development as well as share information and experiences with beneficiaries, financial institutions and other organizations, aiming to create dialogue and promote the integration of efforts to strengthen the bond of social and environmental dimensions as a strategic issue.

Instruments

In addition to the dedicated organizational structure and the internal actions that seek to engage and train employees, BNDES uses the following instruments to implement, monitor, evaluate and update its Socioenvironmental Policy within its operational framework:

• Products, lines, programs and reimbursable and non-reimbursable funds to provide financial support;
• sectorial resolutions, specific policies and other regulations;
• internal procedures to enable risk assessment and social and environmental analysis of beneficiaries and projects;
• methodologies to evaluate beneficiaries, credit risk and monitoring and also to assess the impact of the supported enterprises.

Agreements and protocols signed by BNDES, sharing of information and experience through dialogue, knowledge dissemination and the Bank’s socioenvironmental actions also contribute towards the Socioenvironmental Policy’s implementation.

Operational Procedures

Type of Direct or Indirect Non-automatic Support – not including support for goods and services export

Financial support from BNDES is established within the Operational Policies which define its basic conditions. In accordance with its policies and guidelines, the Bank gives special attention to the social and environmental aspects that are inherent to the beneficiary and the enterprise.

Granting financial aid involves observing the following at all stages of the flow with the support of sectorial studies and other methodologies, whenever pertinent: applicable laws; specific sectorial regulations; the social and environmental responsibility policy of the beneficiaries; environmental compliance; the environmental risk of the enterprise; and socioenvironmental practices that raise the level of competitiveness of the organizations and the economic sectors and improve the social and environmental indicators of the enterprises and the country.

The Bank may conduct complementary studies, request additional information and, in addition:

1. Recommend that the project be reformulated;
2. provide resources to strengthen the mitigating measures;
3. stimulate social and environmental investment towards the internal (employees and supply chain) and external (local development, society and the environment) sphere of the beneficiaries;
4. not grant financial support in extreme cases, when there is non-conformity or social and environmental risk.

In the case of operations in the type of Direct or Indirect Non-automatic support, the operational procedures, in regards to compliance with the guidelines from the Socioenvironmental Policy, follow the flow presented below:

Framework of the operations

• Preliminary evaluation of the main social and environmental aspects of the beneficiaries and the enterprises, according to what is in the Prior Consultation guidelines;
• cadastral research about the beneficiary, which includes verifying registers of work that is equivalent to slavery (consulting the public records or other official means) and environmental crimes;
• preparation of possible social and environmental recommendations for the Analysis and Operational Monitoring stages;
• classification of the Environmental Category of the enterprise: this classification can be measured according to sector and activity type, its location, magnitude and attributes of the environmental impacts inherent to the enterprise.

The Environmental Category of the enterprise is established according to the following table:

Operational review, approval and contracting

The following aspects should be verified during the operational analysis, approval and contracting stages:

• Beneficiary evaluation regarding their policies, practices and socioenvironmental management, including that regarding the external environment, considering their liaison with public policies and sustainable local and regional development, using the Social and Environmental Responsibility concept as a reference;
• beneficiary evaluation in relation to their compliance with environmental agencies, pending litigation and environmental performance effectiveness;
• evaluation of the enterprises regarding eco-efficiency, adoption of processes and social and environmentally sustainable products, GHG emissions and the existence of an Environmental Management System (EMS) and Integrated Management System (IMS);
• evaluation of enterprises with respect to their main social and environmental impacts, including those in the immediate surroundings, their correspondence with preventive actions and mitigating proposals in the environmental licensing, whenever applicable, and verification of their environmental compliance, including the installation license, wherever appropriate;
• evaluation of the adherence to legal environmental requirements, in particular to ecologic-economic zoning and agroecological zoning, and verification that there are no actions that lead to crimes against the environment;
• evaluation of adherence to the ecological-economic zoning provisions in order to support agricultural and forestry enterprises related to opening new areas;
• evaluation of adherence to legal and social requirements and verification of compliance with BNDES’s policies related to: (a) qualification measures and redeployment of workers if, depending on the supported enterprise, there is a reduction in staff; regarding the protection of individuals with disabilities and ensuring there is no discrimination based on race or gender; child labor or slave labor or any other kind of moral or sexual harassment;
• definition of social and environmental indicators for monitoring and evaluating the beneficiary and the enterprise, whenever applicable;
• inclusion of possible types of social and/or environmental constraints established based on the analysis (of the beneficiary and enterprise), in addition to the requirements laid down in law, whenever applicable.

Monitoring of the operations

The following aspects are verified during the stage that involves monitoring the operations:

• The fiscal, social security and environmental regularities of the beneficiary and the enterprise;
• the fulfillment of possible mitigating measures, obligations in terms of conduct adjustments and conditions in the Contract as well as in the Environmental Licenses, wherever applicable;
• the monitoring of social and environmental indicators to follow up and evaluate the beneficiary and the project, whenever applicable;
• the presentation of the Operational (or Working) License for the supported project, whenever applicable.

Type of Direct or Indirect Non-automatic Support – Support for exportation of goods and services within the BNDES Exim Post-shipment product

Regarding the BNDES Exim Post-shipment product, financing operations for exporting Brazilian goods and services exceeding R$10 million in value should be evaluated and classified in terms of their potential risks and environmental impacts.

This regulation does not apply to the BNDES Exim Pre-shipment product.

Framework of the operations

The Socioenvironmental Category classification for exporting goods and services shall be determined in accordance with the BNDES criterion, according to sector, activity type, location, magnitude and attributes of the environmental impacts inherent to the supported enterprise, in accordance with the parameters identified in the table below:

Following its definition, the environmental classification may be revised before the operation is approved, if only the alteration is highlighted and justified before the jurisdictional body deliberates the approval of the operation.

Operational review, approval and contracting

During the operational analysis of Socioenvironmental Category A or B, the documents listed below must be submitted to BNDES:

• Environmental impact studies and related documentation, with a description of the enterprise’s risks and impacts;
• proposal for measures aimed at preventing, minimizing, mitigating, eliminating or compensating for adverse impacts;
• legal certification proving that the enterprise is in line with the local legislation;
• studies, documents and proposals submitted to other financiers, if the enterprise is supported by some other export credit agency and/or multilateral body;
• other documents, in accordance with BNDES’s criteria.

BNDES may include socioenvironmental constraints in addition to those laid down by the legislation that are applicable in the country in which the Brazilian exports are destined.

Operations classified in Socioenvironmental Category A, whenever BNDES’s involvement is equal to or greater than 20% of the value of the enterprise, will be required to contract, at the expense of the Exporter and/or of the Debtor, a company responsible for providing social and environmental consultation services to BNDES.

In such cases, the following will be the responsibility of the company contracted to provide social and environmental consultation services to BNDES: analysis of the socioenvironmental documentation, evaluation of the enterprise’s potential risks and environmental impacts and, when applicable, presentation of additional proposals for mitigating measures against such risks and impacts.

In cases where the enterprise relies on financial support from another export credit agency and/or multilateral body, BNDES may adopt the same criteria and procedures of such entities, if they are considered similar or more rigorous than those listed in this Policy and other applicable standards from BNDES.

Operations classified in Socioenvironmental Category C require that the above listed studies, documents and proposals are submitted and determined on a case-by-case basis, depending on the enterprise’s characteristics and on BNDES’s criteria.

Monitoring of the operations

As a rule, the monitoring of the operations will take place between the signing and the end of the credit period, but may be extended up to the end of the total financing period.

Regarding Socioenvironmental Category A, the previously mentioned socioenvironmental consulting firm should be hired by the Exporter/Debtor for the entire duration of the monitoring period. This company must verify the socioenvironmental compliance of the enterprise, the adherence to any environmental obligations set out according to BNDES’s criteria and the fulfillment of possible mitigating measures and conditions in the Financing Contract and in the Environmental Licenses.

For operations classified in Socioenvironmental Category A, whenever BNDES’s involvement is equal to or greater than 20% of the value of the enterprise, as well as operations classified under Socioenvironmental Category B, in addition to the socioenvironmental compliance, BNDES will require a commitment to fulfill any possible obligations and mitigating measures.

In cases where the enterprise relies on financial support from another export credit agency and/or multilateral body, BNDES may adopt the same criteria and monitoring procedures as such entities, provided that they are considered similar or more rigorous than those listed in this Policy and in other applicable standards from BNDES.

For operations classified in Socioenvironmental Category C, monitoring, whenever necessary, will be determined on a case-by-case basis, depending on the enterprise’s characteristics and on BNDES’s criteria.

Disclosure

For Socioenvironmental Categories A and B, following the signing of the financing contract, an extract of the enterprises’ social and environmental aspects, including the evaluation of their potential risks and socioenvironmental impacts and respective constraints and mitigating measures, will be annually published on BNDES’s website. Socioenvironmental documents used during the analysis and contracting period may also be disclosed.

The disclosure of information and/or environmental documents may be subject to restrictions resulting from applicable legislation.

Type of Indirect Automatic support

In the case of operations in the form of Indirect Automatic support, Accredited Financial Institutions are responsible to verify the social and environmental compliance of the beneficiary and the supported enterprise, as well as the standards related to the social and environmental aspects, with specific criteria and procedures, in line with the guidelines set out in this policy and other applicable BNDES regulations.