Investor Presentaiton
Annual Report
AR
2022
SUMMARY
WHO WE
ARE
OUR
STRENGTH
AND
OUR
RESOURCES
OUR
RESULTS
Agenda BC#
Improvement of the social, environmental, and
climate risk supervision process
Financial institutions must establish a Social, Environmental
and Climate Responsibility Policy (PRSAC, from its name
in Portuguese) and implement actions aiming at its
effectiveness. Additionally, they must include social,
environmental and climate risks in their integrated risk
management processes. As part of this initiative, the content
regarding these two subjects was updated in the publicly
available Guide to Supervision Practices, in order to clarify
to the financial institutions regarding the evaluation criteria
of the BCB supervision regarding the compliance with
requirements, including examples of good practices.
Additionally, research and implementation of solutions
for the identification of climate risks (physical and
transition) in financial institutions in Brazil continued
through contacts with representatives from the Ministry
of Science, Technology, and Innovation (MCTI) and the
National Institute for Space Research (INPE). In addition,
contacts have been made with information providers on
large companies and on geolocation of economic activities
and borrowers in general.
This information is used to improve the monitoring of the
exposures of financial institutions, specifically regarding
climate risks, as well as in the development of climate stress
tests, within the process of evaluating the stability of the
SFN.
First assessment of climate risks in the Financial
Stability Report
The BCB's commitment to the sustainability agenda has
resulted in several actions that seek to reduce the possible
impacts of events associated with social, environmental,
and climate risks. In addition to regulatory and supervisory
measures, the BCB has been implementing databases and
metrics to monitor the effects of climate change in the SFN.
In this sense, the BCB published, in section II of the Financial
Stability Report (REF) of November 2022, the first
assessments for physical climate risk and transition climate
risk within the SFN.
These are the first analyses resulting from a continuous BCB
action, associating and adapting different methodologies
and databases.
A sensitivity analysis of the SFN credit portfolio to physical
risk was presented, based on INPE's projections of extreme
droughts. As for the transitional risk, the exposure of the
SFN's credit portfolio to borrowers who are more exposed
to the process of transition to a low carbon economy was
measured.
One of the main objectives of the studies presented is to
disseminate the topic and promote a better understanding
of climate risk in the financial system. Given the complexity
of the subject, the dynamism of the emergence of new
methodologies, and the availability of new databases,
the expectation is that new studies of this nature will be
carried out and presented in the future, incorporating new
methodologies and addressing different aspects of climate
risk.
Accounting register of investments in carbon
credits and other sustainability assets
The BCB adjusted the accounting register of sustainability-
linked assets in the accounting planning of the Accounting
Standard for Institutions Regulated by the BCB (Cosif).
Sustainability-linked assets are those related to social,
environmental, and climate sustainability mechanisms.
This adjustment aims at providing greater transparency
to the use of these assets by financial institutions, as well
as resolving any uncertainties and standardizing their
accounting register, so that the BCB can monitor the
sustainability-linked assets held by these institutions in their
investment portfolios, monitor the evolution of the market
and, when necessary, adopt measures in a timely manner.
By establishing clear criteria for recognizing and measuring
these elements by financial institutions and other licensed
institutions, it contributes to the growth of these operations in
the financial market. The accounting criteria for recording and
measuring sustainability-linked assets and liabilities defined
by the BCB are in line with the best international practices.
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