BNDES launches credit line at lower interest rates linked to ESG targets
Last August 11th, 2021, the National Bank of Economic and Social Development (BNDES) launched the BNDES Credit ESG (ASG – portuguese acronym), aimed at companies involved in the reforestation wood chain, manufacturers of equipment for renewable energy and energy efficiency, mining, steel and small internet providers, which once they assume and meet targets to advance in their environmental, social and governance (ESG) performance will have more advantageous conditions in accessing credit.
The main incentive will be the reduction in the interest rate linked to counterparts and ESG goals. The intention is that the credit offer is extended to other sectors in future. Although the fulfillment of ESG goals implicates in the reduction of the interest rate, the resources do not necessarily have to be destined to socialor environmental projects. The initiative is in line with the increase in the taking of debt linked to clear commitments to improving their sustainability indicators of companies.
Each company will be able to obtain up to BRL 150 million in loans, with BRL 1 billion available in the budget for the initiative until 2023. Established at 1.5% per year, in addition to interest and credit risk rate related to the client's profile, BNDES remuneration may be reduced by up to 0.4% if stipulated counterparts and targets are met.
Among the general obligations, which will serve all participating companies, are:
- the annual publication of a Social and Environmental Responsibility Policy (PRSA);
- the incorporation, in the company's Social Investment Policy, of priority focuses of action in education and diversity, as part of the strategy to combat prejudice and discrimination based on race, LGBTQIA+, ethnicity, gender and disabilities; and
- the annual publication of the Sustainability Report.
In addition, BNDES will require the fulfillment of two ESG targets, which will be chosen from a set of five predefined indicators:
- obtaining an environmental certification;
- obtaining a social certification;
- carrying out an inventory to reduce the emission of greenhouse gases or to capture carbon;
- the expansion of the number of suppliers from the North and Northeast; and
- the expansion of the broadband services customer base.
BNDES' initiative comes in the wake of Brazil's efforts at COP26, the United Nations conference on climate change, which will take place in November in Glasgow, UK.
The Environmental team is available in case of doubts.