2013 Annual Report

FRUBEE PORTFOLIO FUNDING TO CRITICAL SECTORS G4-PR6 2013 % of total portfolio* 2011 2012 Portfolio % of total Portfolio % of total Portfolio (thousand of R$) portfolio* (thousand of R$) portfolio* (thousand of R$) Tobacco, Alcoholic Beverages, Arms and Ammunition industries Financing and Marketing of Fossil Fuels Damage to Food and Nutritional Safety 1,151,301 12,967,964 187,729 0.52% 5.90% 0.09% 1,160,705 11,665,140 229,283 0.48% 4.82% 0.09% 1,129,523 9,523,998 204,219 0.43% 3.64% 0.08% * Portfolio with Collateral and Interbusiness Processes for monitoring clients' implementation of and compliance with environmental and social requirements included in agreements or transactions G4-FS3 The Social and Environmental Risk area conducts social/ environmental audits of clients and projects that must undergo analyses under the Equator Principles. To this end, the department relies on the experience of its personnel, all of whom are graduates in Chemical Engineering, Biology, Geology and Health and Safety Engineering. The audits are conducted by means of the assessment of documentation, dialogue with the relevant client and in loco visits to the projects, and may result in proposals for improvements and adaptations to ensure compliance with the guidelines of the Equator Principles. These activities give rise to an action plan compiled jointly by the Bank and the client, which in turn undertakes to comply with the plan, subject to cancellation of the loan. Retaining an independent social/environmental auditor is considered at the time of aligning the financing for projects under the Project Finance portfolio in accordance with the Equator Principles. Projects which fall under category A of the Equator Principles automatically require the assessment of an external auditor. Assessment by an external auditor is not required for the remaining categories (B and C) and the need of any such audit is assessed individually. The audit verifies and analyses potential weaknesses and improvements for adapting the project to the guidelines of the EP. Based on the analysis, an action plan is drawn up specifying the gaps for compliance with the EP. The action plan is monitored by the Bank and the compliance with such plan is included in the loan agreement. Where possible, an action plan for dealing with non- compliances is drawn up. If there is no other possibility, the contractual clauses are executed and the agreement may be terminated or the acceleration clause may be invoked. Where a closer monitoring in terms of both loan concession and the acceptance of new clients is warranted, audits may be required to verify the company's social/environmental practices. These audits include the review of documentation, dialogue with the relevant client and on-site visits in order to substantiate its social/environmental practices. The audit may give rise to an action plan geared to adapting the client to the best social/environmental practices. Independent auditors are hired jointly by the Bank and the client, monitored by the Social and Environmental Risk department. In 2013, independent audits were conducted for two projects analyzed by the Social and Environmental Risk department and three visits were made to clients. Process(es) for improving staff competency to implement the environmental and social policies and procedures applied to business lines G4-FS4 Social and Environmental Risk training is provided in 4-hour classroom sessions, and addresses the concept and practice of social/environmental risk in loan concessions and the acceptance of clients. The course is held at least on quarterly basis for groups of around 20 loan analysts and relationship managers. In 2013, 20 new and 54 existing Bank employees attended the social/environmental training course, which helped the Bank achieve 74% of the target set for training on social/environmental risk. This training activity is not mandatory, although it is highly recommended for the marketing and risk departments. The training is assessed by means of feedback. Interaction with clients/investors/business partners in relation to environmental and social risks and opportunities G4-FS5 The aim of the Espaço de Práticas em Sustentabilidade (the Sustainable Practices Initiative) initiative is to promote the awareness and engagement of clients and society with regard to sustainability by sharing and designing practices. To this end, Santander fosters the engagement of stakeholders (clients, employees) and organizations (partners, suppliers) in programs geared to the inclusion of sustainability in our day-to-day activities. The website www.santander.com.br/sustentabilidade provides the public at large with a variety of materials such as brochures, online courses and presentations which show how to include sustainability in the daily activities of people and businesses. Furthermore, it discloses information on a regular basis on what has been done to advance on this topic at Santander and to ensure it plays an increasingly important role in business and management practices. The Bank launched the online course Vida Financeira (Financial Life) in 2013, with the aim of helping participants administer their budget. A presentation on Sustainable Construction was also made available, disseminating eco-efficient construction practices and examples of what is being done, in addition to suggesting means of learning more about the subject. The Sustainable Practices website received 466,868 visits. Striving to promote the advancement of suppliers, the Bank held two events with suppliers from critical sectors from a social/environmental perspective (Civil Construction and Call Center), with the aim of sharing practices which help reduce social and environmental risks. The entire content of these meetings was based on the guidelines of the Global Compact. 80 builders and 105 employees from the civil construction sector and 10 companies and 50 people from the call center sector took part in the meetings. Moreover, the Bank participated in initiatives promoted by partner organizations such as the Insituto Ethos and the World Resources Institute (WRI). Santander participated in one of the most important events involving sustainability in Brazil, the Ethos Conference, between 03 and 05 September. A full list of the forums the Bank takes part in is available at www.santander.com.br/sustentabilidade/Compromissos e fóruns. 172 Annual Report 2013 173

View entire presentation