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Fair Finance Brazil is taking action against investments in fossil fuels; BNDES can be an important actor of change

Thursday, October 14, 2021

In partnership with WWF Brazil and 350.org Latin America, Fair Finance Brazil is calling on the bank to publish their net zero commitments 

Fair Finance Brazil, alongside WWF Brazil and 350.org Latin America, contacted BNDES (Brazilian National Development Bank) with suggestions of improvements with regards to the banks’ transparency and net zero initiatives. The suggestions were sent after a dialogue with the bank about their ESG agenda.

Among the proposals presented to BNDES, there is a request for formalization of the bank’s commitment to stop investing in coal-fired power stations and for more transparency and accountability on their website and Annual and Sustainability Reports. 

BNDES is part of the Fair Finance Guide Brazil ESG policies evaluation since 2018. The Brazilian coalition, coordinated by Idec (the Brazilian Institute of Consumer Protection), has been developing an open and positive dialogue with the bank since then. As a result the Institute, together with partner organizations, is taking BNDES’ improvements on the energy transition as an opportunity to promote change in the financial sector in the country, which is not doing enough to guarantee net zero, despite the energy and water crisis in the country. 

In an interview, Bruno Aranha, who recently joined as the Director of the bank’s production and socio-environmental credit department, said that BNDES is restructuring the governance with the aim of decarbonizing its portfolios and going forward this can extend to their exclusion list. It is known that since 2016, the bank has a commitment to stop financing coal-fired power stations, which was reinforced in 2021. This commitment, has however still not been formalized in official documents.

To keep advocating for the formalization of the commitments announced by the bank and to press for effective changes to be made to ensure the disclosure of quantitative data on improvements;  Idec’s specialists on Energy and Financial Services, working with WWF Brazil and 350.org Latin America made the following proposals to BNDES:

  • The formalization of official documents that address the non-investment initiatives in coal-fired plants and publication of related official documents
  • Disclosure of data on the Amazon Fund, Climate Fund and Social Fund, with greater transparency, including information related to transfers that have occurred and details of projects contemplated
  • The setting of a measurable goal on disinvestment in fossil fuels and decarbonization of BNDES assets’ portfolio.

With regard to the last suggestion, it is important to note that even though BNDES is advancing with their policies and actions of not financing companies with negative impact activities, such as Vale, there are further steps that are still needed. BNDESPar (the banks’ subsidiary, responsible for managing their assets portfolio), for example, has 0.95% of Engie’s capital, which represents 0.38% of BNDESPar portfolio. Engie has been involved in a controversy since the company's international headquarters, based in France, promised to stop Brazilian “Jorge Lacerda” coal plant activities until 2025. Instead, Engie intends to sell it to Fram Capital for R$ 325 million, putting local communities and mining workers in danger. The company declared it as part of their “strategy on decarbonizing and promoting an energy transition”. 

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