Messages from the ADMINISTRATION
Messages from the Board of Directors
The year 2020 will be marked by the spread of COVID-19 and the challenges it has imposed on essential aspects of our lives. In Brazil, as in other countries in the world, the fight against the pandemic involved the commitment of all, requiring the participation of governments, companies and individuals in the search for solutions to deal with this new reality.
The crisis highlighted, once again, the BNDES’ capacity to act in a countercyclical manner, responding to the urgent needs of the country and the population. The Bank's importance for expanding credit, especially for micro-, small- and medium-sized enterprises (MSME), and for the maintenance of jobs and income has gained prominence, showing that the institution makes a difference in the life of the population.
This social and also environmental impact – if we think, for example, of investment in sanitation, renewable energies or forest preservation – has always been at the core of the BNDES’ mission. Increasingly, this impact guides and serves as a standard for any and all initiatives of the Bank. In line with the environmental, social and governance principles, the institution evolves in the pursuit of effectiveness, that is, in delivering results with a direct positive impact for Brazilians.
In this sense, the future of the BNDES already seems to be well planned. It considers traditional sectors in which the Bank operates, such as infrastructure and the productive sector, albeit from a renewed perspective as to sustainability, the transition to a low-carbon economy, and the digital transformation. It comprises activities in education, health and security, always focusing on improving public services provided to the population and the efficiency of public administration.
It is a path aimed at socioenvironmental impact and that also includes an expansion of the modes of operation of the institution. In a movement that is already underway, the Bank will continue to diversify its operations beyond credit, standing out in the structuring of projects, in the granting of guarantees, in investments in funds and in the issuance of green bonds, just to mention a few examples. Concurrently, the granting of credit will gain scope and outreach through the digital transformation of the Bank and the development of new solutions in partnership with financial agents and fintech companies. This brings the BNDES increasingly closer to MSMEs and entrepreneurs, leveraging the institution's impact on job and income generation.
Partnerships with other institutions, such as international funds and multilateral banks or development finance institutions, will constitute another important step in this path. They point to the need of considering joint efforts and the composition of resources to guarantee more effective and lasting results for the Bank's operation, while also aligning itself with the concern over financial sustainability. In this context, the growing worldwide interest in sustainable investment implies a very favorable prospect for the BNDES to become a catalyst for investments for the country.
As representatives of the highest governance body at the BNDES, we reinforce our commitment to this vision for the future and to the strategy planned to accomplish it over the next years. The challenges imposed by the pandemic persist, and we know that 2021 will again demand effective responses from the Bank so Brazil can resume a trajectory of economic growth based on sustainability.
We invite the readers to learn about the path followed by the BNDES in 2020 and the strategic agendas for the future, presented in a complete and integrated manner in this report. It is part of our commitment to transparency and more direct communication with society.
Board of Directors
BNDES | BNDESPAR | FINAME
Message from the President
A 2020 with a focus on Brazil and Brazilians
In the intense and challenging year of 2020, the BNDES’ operation was based on disruption, innovation, transparency and purpose.
The COVID-19 pandemic showed us the importance of knowing how to navigate the unknown. Flexibility and innovation have become attributes of great value to companies, governments and society.
The challenge was even greater for the BNDES, which, just over a year ago, faced reputational and strategic issues. Typical issues of long-lived institutions, which, depending on how they are treated, can be an opportunity to make an organization even stronger, more alive and permanent. And so we did.
The BNDES turned to its values and its purpose to strengthen itself and plunge into this unknown future, seeking to improve the lives of Brazilians, especially those in poor conditions.
Faced with the pandemic, our team adapted quickly and creatively: squads, which are multidisciplinary teams crossing hierarchies and valuing knowledge networks, emerged spontaneously, forming transversal working groups. All of this working in home office.
Regarding strategy, the Bank has consolidated itself as an institution with multiple products and services. A private sector collaborator and supporter, working to complement it. This strategic movement proved right, for example, with the formation of a bank syndicate to support the electricity sector with R$ 16 billion through COVID-Account.
The difficulty of micro-, small- and medium-sized enterprises (MSME) to obtain financing, which has always been a structural issue in Brazil, became even more critical in 2020. The BNDES had to respond to the business society's wishes for credit. It managed, in a short time, to digest, understand and react to the new unknown conjuncture, choosing to focus efforts on MSMEs.
In addition to several countercyclical credit measures, it launched the FGI PEAC, built in conjunction with the Ministry of Economy, the National Congress, business associations, the financial sector and companies. This guarantee instrument, innovative on such a large scale in Brazil, contributed to mitigate the risk perceived by financial institutions in supporting MSMEs, enabling them to access credit and remain active. There were more than R$ 90 billion in credits provided by the guarantees included in the program.
The purpose of supporting those most in need also resulted in a direct action, called Matchfunding Saving Lives, through which, for one each real donated by society, the BNDES donated another one real. The result was one of the largest crowdfunding in history, which raised R$ 79.1 million for hospitals of the Santa Casa da Misericórdia charity in practically all states in Brazil. It was an act of solidarity and communion of purpose between twenty companies and more than five hundred individuals, which inspires us to do more.
We ended 2020 with more than R$ 200 billion in support to Brazilians (R$ 64.9 billion in disbursements from the Bank, in addition to other emergency actions), contributing to create or maintain 4.7 million jobs. More than 460,000 MSMEs and individuals were supported by credit and guarantee operations. We achieved a large portion of our goals for the year, adjusting our strategy according to the new reality.
We would not have reached such level had it not been for the Ministry of Economy's decision of suspending extraordinary returns from the BNDES to the National Treasury, scheduled for 2020, and of directing the concentration of efforts to countercyclical actions and economic recovery.
The BNDES also sold, in the year, approximately R$ 45.4 billion in shares issued by large companies. We reduced our degree of exposure to the market and reallocated resources in other activities that are strategic for the country's development. Such divestments strengthen our financial capacity, contributing to maintain a stable and solid development bank and to reach a record net profit of R$ 20.7 billion.
This stable, solid and reliable development bank is the keystone of the agenda for the future proposed by the BNDES. The availability of resources is not currently the main bottleneck for our development. Our greatest need is for good projects: good modeling, mature environmental analysis, engineering plans, concession contracts, adaptation to the control bodies, and adequate financial parameterization.
In 2020, we consolidated our institution as possibly the largest project structuring bank in Brazil in per capita terms, with more than one hundred mandated projects with investment potential of R$ 200 billion. This robust project factory had its first concrete results observed in auctions for public lighting, basic sanitation and electricity distribution.
The focus on socioenvironmental impact has also been greatly enhanced within the BNDES. The Bank's already traditional work in this sector has gained more strength, anticipating environmental, social and governance (ESG) issues. As a result, the Bank became more open to external relationships, intensifying its care for the environment and society.
Transparency, honesty and openness continued in 2020. The BNDES Aberto has become a proactive culture of providing information, for the desire to explain and elucidate. All of these efforts led to the recognition by Brazil’s Federal Court of Accounts that the BNDES is the federal state-owned company with the best level of informational transparency on its corporate website.
Our Board of Directors also received renowned members who reinforced the Bank's commitment to society, transparency and corporate governance.
All the above is reported in this document, whose integrity I assure. Our annual report is the result of collective thinking, which involved all areas and several decision-making bodies of the BNDES, in addition to an external consultation to map material issues. The document follows the model of integrated reporting and the Global Reporting Initiative (GRI). It is also our management report.
In 2021, Brazilian society can rely on a BNDES that is even more prepared to meet its wishes, to always operate where it is needed the most. We will focus on executing the already contracted portfolio of the project factory, coordinating efforts and resources to improve public services. We will induce the credit market through project finance and co-financing, improving corporate governance and increasing our range of operations, assuming project risk. We will pay special attention to MSMEs, which account for more than 50% of jobs in the country, but still face major credit restrictions. We will continue our divestment strategy, with the aim of aligning our portfolio to the purpose of a development bank, repositioning investment activities for businesses of socioenvironmental impact. We will lead the environmental, social and governance process in Brazil, generating business opportunities to induce customers to benefit from sustainability, favoring the country’s competitiveness. With a sense of purpose, acting collaboratively and innovatively, we will seek to continue a transformational action, with great impact for Brazil.
Gustavo Montezano
President of the BNDES