Sustainability Strategy

Sustainability strategy

Sustainability strategy

 

Sustainability and the fight against climate change represent one of the greatest disruptions in history with great opportunities for banks, helping clients to move towards a more sustainable world, minimizing the risks while maximizing the opportunities that arise. For BBVA, sustainability includes two areas of action: climate change and sustainable and inclusive growth.

For this reason, BBVA incorporates sustainability at the heart of its strategy, being, as we have previously mentioned, one of the six established strategic priorities. This strategic priority has been divided into four objectives included in BBVA’s General Sustainability Policy, which are:

  • Fostering Sustainable Growth
  • Integrating sustainability  risk in the processes
  • Establishing a unique agenda with stakeholders
  • Developing the necessary sustainable capabilities

 

In 2018, BBVA presented its 2025 Commitment to channel €100 billion in sustainable finance by 2025 to contribute to the achievement of the SDGs and the challenges arising from the Paris Climate Agreement. Since then, the Group has advanced in the development of this priority, integrating sustainability transversally in internal management and processes and also in the relationship with customers and other stakeholders.

In 2021, the bank doubled this target to €200 billion and as of June 30, 2022, the bank had reached €112 billion at a pace that has pushed the bank to raise once again the goal, to €300 billion, three times its initial commitment.

BBVA is also committed to being Net Zero by 2050, not only for its direct emissions, goal already achieved since 2020, but also for indirect emissions, that is, those of the customers it finances. To achieve this goal, BBVA has committed to stop financing coal by 2030, in developed countries, and by 2040 in the rest of the geographies where it operates. In addition, BBVA has set up intermediate objectives to decarbonize its credit portfolio in some of the most carbon-intensive sectors and participates as a founding member of the Net-Zero Banking Alliance (NZBA).

BBVA presents its Community Commitment, by which €550m will be allocated between 2021 and 2025 to social initiatives supporting inclusive growth in the countries where the Group operates. This commitment is a response to the most important social challenges and aims to contribute to a sustainable and inclusive recovery.

BBVA is also committed to transparency and therefore publishes the TCFD Report, following the recommendations of the Task Force on Climate-Related Financial Disclosure sponsored by the Financial Stability Board (hereinafter, FSB). In addition, since 2020 BBVA has published additional sustainability metrics following two of the most advanced standards in the market, such as those issued by the World Economic Forum-International Business Council (hereinafter, WEFIBC) or by the Sustainability Accounting Standards Board (hereinafter SASB).

TCFD

BBVA 2021 Report on TCFD

See report

WEF-IBC and SASB Metrics

Alignment of BBVA Group's non-financial information to WEF-IBC and SASB standards

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Contribution to society

 

In 2021, BBVA presented its Community Commitment, by which €550m will be allocated between 2021 and 2025 to social initiatives supporting inclusive growth in the countries where the Group operates. This commitment is a response to the most important social challenges and aims to contribute to a sustainable and inclusive recovery.

The plan is structured around three main scopes of action to comply with specific Sustainable Development Goals (SDGs): reducing inequality and promoting entrepreneurship (SDGs 8 and 10), providing opportunities for all through education (SDG 4) and supporting research and culture (SDGs 9 and 11). BBVA also boosts cooperation and collaboration through commitments and alliances for sustainable and inclusive development (SDG 17).

In 2021, the BBVA Group allocated €106.3m to investment in the community, with 44.2 million beneficiaries. BBVA puts this community contribution commitment into practice through its local banks and foundations, as well as supporting other foundations such as the BBVA Foundation and the BBVA Microfinance Foundation.

 

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Governance model

 

BBVA’s corporate bodies have defined and driven the Group’s strategy that incorporates sustainability and the fight against climate change as one of its priorities, having approved its basic elements (through its incorporation to the Group’s strategic plan in 2019, and with the approval of the General Sustainability Policy in 2020) and carrying out periodic monitoring of its implementation in the Group.

For the Board of Directors, an essential element of this strategic approach is the integration of sustainability and the fight against climate change into the Group’s activities, managing the risks associated with these areas, and considering them a great opportunity for business in which to support its growth strategy:

  • Executive Committee
  • Risk and Compliance Committee
  • Audit Committee
  • Remuneration Committee

 

In 2021, BBVA gave a renewed boost to its strategy of increasing sustainability to the highest executive level of the organization, reporting directly to the Chief Executive Officer and the Group Executive Chairman, creating the Global Area Sustainability business area with the aim of becoming the model bank for customers in sustainability solutions.

 

 

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Management of climate risks

 

The risks associated with climate change (transition and physical) are considered an additional factor that impacts the risk categories already identified and in BBVA are managed through the Group’s risk management frameworks (credit, market, liquidity, operational and other non financial risks). Climate risk management in BBVA Group is based on the process of risk planning which is marked by the defined risk appetite and makes use of management frameworks which establish how these risks are to be treated in day-to-day business activity.

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Risks associated with climate change

Transition risks and physical risks

See table

Climate risk management model

Management of risks associated with climate change

See model

Management of direct and indirect impacts

 

As a financial institution, BBVA has an impact on the environment and society directly through the consumption of natural resources and its relationship with stakeholders; and indirectly, and most importantly, through its lending activity and the projects it finances.

The global strategy of the reduction of direct impacts is organized around four core elements: reduction in consumption through the energy efficiency initiatives:

  • reduction in consumption through the energy efficiency initiatives
  • use of renewable energy
  • awareness and involvement of employees and other stakeholders in the path toward a low-carbon economy
  • offsetting its carbon footprint through the purchase of credits of projects of the Voluntary Carbon Market to comply with the commitment acquired in 2020 to be a carbon-neutral company

 

Managing indirect impacts that customers generate on the environment is part of the Pledge 2025. To manage them, BBVA has implemented a number of initiatives and tools, within environmental and Social Framework or the Equator Principles.

 

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 Materiality analysis

 

BBVA seeks to have a positive impact on the lives of people, companies and the society as a whole through its activity. To generate value for its stakeholders, BBVA carries out a regular analysis called the “Materiality analysis” which helps prioritize the most relevant issues for both stakeholders and BBVA.

The materiality analysis was carried out in 2020, and its main conclusions were valid for 2021. It includes the point of view of the stakeholders in the main countries in which BBVA operates: Spain, Mexico, Turkey, Argentina, Colombia and Peru.

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The four material issues with greatest importance now and over a longer time horizon, for both stakeholders and BBVA’s business strategy, are as follows:

  • Climate change
  • Solvency and financial results
  • Easy, fast and do it yourself (DIY) service for customers
  • Financial health and personalized advice to customers

 

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 WEF-IBC and SASB Metrics 

 

BBVA has assumed the commitment to disclose in a consistent, reliable and standardized manner the essential aspects of ESG (environmental, social and governance matters) related to its business. Among the different existing standards, BBVA includes its non-financial information in the Non-Financial Information Statement (EINF) for the year 2021, in accordance with the Global Reporting Initiative (GRI) guide.

In addition and on a voluntary basis, BBVA publishes progress in ESG disclosures, according to two metrics with a high reputation in the market:

  • WEF-IBC core metrics. BBVA has been one of the first entities worldwide to support the Measuring Stakeholder Capitalism initiative of the International Business Council (IBC) of the World Economic Forum (WEF).
  • Sustainability Accounting Standards Board (SASB) – Commercial Banks standards. The Sustainability Accounting Standards Board establishes standards to guide companies on the disclosure of relevant and consistent financial information in terms of sustainability.

 

WEF-IBC and SASB metrics

Alignment of WEF-IBC and SASB standards

Participation in international initiatives

 

For over 20 years, BBVA has participated actively in various supranational initiatives. BBVA wants to continue to be the leader in the international agenda in favor of inclusion and the fight against climate change, expressing its commitment to various initiatives.

In addition to the UN Global Compact, BBVA co-chairs the UNEP FI steering committee, holds the chair of the sustainable finance working group at the European Banking Federation and is a member of the steering committee of the Equator Principles. BBVA is also a member of the Steering Group of the Net Zero Banking Alliance, the Sustainable Finance Working Group of the Institute for International Finance, the Task Force of Voluntary Carbon Markets and the Alliance of CEO Climate Leaders of the World Economic Forum.

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Management of direct and indirect impacts

 

As a financial institution, BBVA has an impact on the environment and society directly through the consumption of natural resources and its relationship with stakeholders; and indirectly, and most importantly, through its lending activity and the projects it finances.

The global strategy of the reduction of direct impacts is organized around four core elements: reduction in consumption through the energy efficiency initiatives:

  • reduction in consumption through the energy efficiency initiatives
  • use of renewable energy
  • awareness and involvement of employees and other stakeholders in the path toward a low-carbon economy
  • offsetting its carbon footprint through the purchase of credits of projects of the Voluntary Carbon Market to comply with the commitment acquired in 2020 to be a carbon-neutral company

 

Managing indirect impacts that customers generate on the environment is part of the Pledge 2025. To manage them, BBVA has implemented a number of initiatives and tools, within environmental and Social Framework or the Equator Principles.

 

More information

 

Updated page 14 July 2022