The integration of ESG variables into the Group’s risk management is a new element, although closely related to the rest of the traditionally managed risks. The ESG (environment, social and corporate governance) variables aim to manage extra-financial risks that can affect the credit profile of a borrower or financing project and may threaten the repayment of the debt. While awaiting a clearer definition in this respect by the Basel Guidelines, the Group has already been working for years on four aspects: the credit profile of the company clients using the ecorating tool; financing major investment projects using the Equator Principles standard; sustainable development lines by agreements with multilateral development banks; and sectoral financing policies.
- Ecorating. An environmental risk analysis was carried out in 2011 of 214,091 customers in Spain by combining three groups of variables: polluting emissions and consumption of resources; the environment of the area around the company liable to be directly or indirectly affected by it, and legislative pressure and tax treatment of certain environmental components.
- The Equator Principles. This is a global standard for management of ESG risks when providing finance and advice for investment projects with a capital cost of over US$10 million. It arose from the performance standards of the International Finance Corporation and has been developed by the most active banks in project finance at a global level.
- Lines from multilateral banks for regional development that require the recipient to have in place or to implement systems for managing environmental, social, ethical and corporate governance risks in fund management.
- Sector policies: In the case of BBVA, its rules of conduct regarding the defense sector as well as other policies, which may be checked on www.bancaparatodos.com.