2013 Annual Report
138 Annual Report 2013
SOCIAL/ENVIRONMENTAL
RISK AUDIT
Materiality, impacts and item control mechanisms
Conducting audits in the Social and Environmental Risk (RSA) analysis
is a material item at Santander because it strengthens our work processes
while improving risk management and ensuring the compliance with internal
policies, regulatory requirements and international covenants. Strong RSA
analyses are key to our goal of promoting sustainable business.
The main positive impacts in connection with this item are improved work
processes, compliance with internal policies and external regulators while
providing information on the main item to the Bank top management. On
the other hand, without an audit the governance for this topic is weaker,
while internal processes may be subject to loss of efficiency, thereby exposing
the Bank to regulatory risks.
In order to monitor this item, the Bank adopted a process to verify the compliance
with internal policies and regulatory requirements. To that effect, we conduct tests
with random samples; we interview employments, and provide recommendations
for improvement.
This topic is conducted by the Auditing Executive Board.
Management approach assessment
A report on the outcome of the auditing work is sent
to the Bank's Executive Committee, which includes the
person in charge of the audited area. In case there are
any recommendations for work process improvement,
the relevant area is in charge of implementing any such
recommendations.
Indicators Consolidation
Coverage and frequency of audits to assess
implementation of environmental and social
policies and risk assessment procedures G4-FS9
This work is performed on an annual basis by the Bank's
internal audits via a random client sample in 14 sectors that
are deemed to have the strongest social and environmental
impact1, with credit limits or risk in excess of R$ 1 million
in Wholesale, notwithstanding their geographic location.
These clients are required to complete the Social/
environmental Questionnaire (QSA), which is assessed
by the Social/Environmental Risk (RSA) team. The current
focus are potential consequences, whether direct or
indirect, of client activity such as reductions in cash flow,
loss of assets, reputational risk, risk to public health, loss
of natural ecosystems. In addition, there is a special Social
and Environmental Risk Policy for the arms segment,
which sets out criteria for clients in the sector. Project
Finance requires specific analysis and compliance with
the Equator Principles. The acceptance of new clients
in Wholesale also involves social/environmental analysis
carried out by the Compliance/ Money Laundering
Prevention (UPLD) area.
Policies and commitments
The audit work performed in credit portfolios abides by the internal guidelines
on credit risk evaluation, which includes social and environmental risk assessment
for certain clients. The benchmarks used to develop the internal standards are
our Social and Environmental Policies.
In 2013, the Bank was committed to conduct auditing in areas such as Corporate
and Global Banking & Markets, in Wholesale.
1. The 14 sectors are: 1. Agriculture and cattle-raising; 2. Collection, treatment, recycling and disposal of solid waste (domestic, industrial and hospital); 3. Civil construction;
4. Builders and developers; 5. Energy generation, transmission and distribution; 6. Hospitals and labs; 7. Manufacturing Industry; 8. Oil/Natural gas drilling and exploration;
fuel distributors and service stations; 9. Lumber mills, sawmills, development, furniture and stores; 10. Metalworks, steelworks, pig iron and electroplating; 11. Mining;
12. Fishing and aquaculture; 13. Transport, terminals, except for passengers, and warehouses; 14. Biological diversity, forestry and forestry products.
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