2013 Annual Report

EMPREGO 158 Annual Report 2013 INDIRECT ECONOMIC IMPACT Materiality The indirect economic impact is a material issue for the Bank as it is one of the key items in the financial sector; it generates a high impact on society while implying reputational risks. The main indirect economic impact generated by the Bank is associated with our core business, i.e., interest income. The Bank uses agents with surplus cash to fund agents with shortage of cash, thereby supporting investment and contributing to higher levels of economic activity, job and income generation. In addition to the multiplication factor, other indirect economic impacts can be noticed from specific lines of business, social activity and additions to the infrastructure of cities and communities. The management of this topic is in charge of the heads of individual units. In this report, the Bank highlights the efforts in connection with education, microcredit operations and investments in infrastructure. Policy The indirect economic impact is an integral part both of the interest income and all activities in connection with education, social inclusion and infrastructure; therefore this item is not dealt with in specific policies for each initiative. We note, however, that every business activity of the Bank is subject to our approach to sustainability, i.e., the Bank must promote activities that benefit all - the society, the environment and the Organization itself. Thus, maximizing the indirect economic impact is a goal for all areas at the Bank. Programs G4-EC7 G4-EC8 Education: One of our beliefs is that investing in education is the best way to support the country's development, and we are active in all steps of the educational cycle - from elementary school to higher education. This effort is materialized via initiatives such as the Programa de Educação Infantil (The Kindergarten Program, see more on page 106 of the Annual Report), the Programa Escola Brasil (see more on page 105 of the Annual Report) and Santander Universities (see more on page 80 of the Annual Report). Microcredit: In addition to promoting the social and financial inclusion of borrowers, the productive/guided microcredit contributes to drive community prosperity. One of the most outstanding characteristics of this business is that as the entrepreneur invests in expanding his business he often generates employment for family and neighbors. Another factor that contributes to strengthening local economy is that the borrower usually uses his income to purchase from stores and service providers in his neighborhood. With an experience in microcredit that spans over ten years, we estimate that approximately 70% of the income generated circulates around the community thereby starting a virtuous circle of investment. Infrastructure: The Bank invests in setting up digital rooms in public and private universities. The Espaço Digital Santander Universidades comprises rooms with computing lab infrastructure to promote the access to information and digital inclusion to the academic community. All and all, we have set up 44 rooms in colleges and universities throughout Brazil, with a positive impact on 1.5 million people among students, professors and employees, also benefitting the nearby communities. The Bank also invests approximately R$600,000 in public infrastructure. One of the key purposes of this investment is maintaining green areas in the city of São Paulo. In 2013, the Bank cared for more than 45,000 square meters of green areas. The square and gardens under the Bank's care bear plates with our logo. Assessment Mechanisms The indirect economic impacts that are quantifiable are mainly associated to Social Investment initiatives. However, we assess these projects for their outcomes, not impacts. The process adopted by the Social Investment area created a link between outcomes and official indices with the purpose of detecting evidence on the possibilities of impacts as a result of our intervention. The model to assess outcomes adopted by the Social Investment area was reviewed throughout 2013. The assessment of impacts in microcredit is done via credit indicators and the monitoring of credit agents. 159

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