Together with the traditional financial variables, BBVA’s risk management takes into consideration the environmental, social, ethical and corporate governance aspects (ESG). These extra-financial risks can affect the credit profile of the borrowers or projects financed by the Group and, therefore, the quality of the risk taken and, in short, the repayment of the loans. Their integration into risk management is consistent with the principle of prudence that governs BBVA’s activity.
These risks materialize in various lines of action:
In 2011, BBVA set up its SAR Committee, Social, Environmental and Reputational Risk Committee. Its mission is to drive and monitor actions that promote the integration of social and environmental risks into the Group’s activities, as well as to manage crucial reputational risks.
The Equator Principles (EPs), a set of global standards for determining, assessing and managing environmental and social risks when providing finance for investment projects with a capital cost of over USD 10m. They are based on the International Finance Corporation’s Policy and Performance Standards on Social and Environmental Sustainability and the World Bank’s Environmental, Health and Safety general guidelines. Since its adoption of the EPs in 2004, BBVA has applied them with a broader scope than the standard, extending them to projects in the operational stage and those funded with other financial products: project bonds, assignment of credit rights and project-linked guarantees. In addition, BBVA does not apply the minimum threshold established, USD 10m, and reviews all operations under the EPs, irrespective of their amount.
The Ecorating tool, which evaluates the environmental risk of companies. Each customer is assigned a credit risk rating according to a combination of various factors such as location, polluting emissions, consumption of resources, potential to affect the environment or applicable legislation. The ratings obtained are used to manage, with each customer, measures aimed at mitigating their level of environmental risk. In 2013, BBVA has analyzed the environmental risk of 215,026 customers in Spain using the Ecorating tool.
Defense policy, whereby BBVA does not finance, invest in, or provide any financial services to companies engaging in the manufacture, development, maintenance or trading of controversial weapons. Neither does BBVA participate in armament-related operations that originate in or are targeted at countries where there is a high risk of human rights violation.
For more information, please check the corporate responsibility annual information, available in this link:
