SOCIAL AND ENVIRONMENTAL RISK POLICY

Transcription

1 SOCIAL AND ENVIRONMENTAL RISK POLICY This policy establishes social and environmental guidelines related to the process of credit to Companies in Itau Unibanco S.A. 1. PURPOSE To formalize social and environmental criteria adopted by Itaú Unibanco in its process of credit to Companies, also addressing the adherence of its practices to the Voluntary Commitments, particularly to the Protocolo Verde (Green Protocol), the Equator Principles and the Pacto Nacional para Erradicação do Trabalho Escravo (Pact for Eradicating Slave Labor). 2. RESPONSIBILITIES Business Units The Business Units have to: Comply with the principles and rules in this policy during their activities. Develop specific procedures regarding the application of the principles and rules in this policy, taking into consideration the particularities of the business unit. Establish the schedule for implementing this policy in the respective business unit. Internally support sustainable development actions and programs. Provide training to the professionals of commercial and credit areas in the respective business unit. Instruct the clients in obtaining the environmental documents necessary for establishing and disbursing credit operations, aiming to improve social and environmental practices of these credit trades. Assess the environmental damage caused by the realty. Internal Controls and Compliance The internal controls and Compliance has to: Asses the adherence to the principles and rules in this policy in the business units, recording the significant occurrences of non-compliance. Assist the business units in the preparation of action plans to mitigate risks arising from non-adherence to this policy, as well as monitor the evolution of said plans. Report to the Social and Environmental Risk Committee on the schedule for the implementation of this policy (and the compliance with it), as well as on cases of non-adherence or suspicions of non-compliance with this policy. Clarify doubts regarding the interpretation of the principles and rules in this policy. Give support to the development of training programs on the principles and rules in this policy for professionals of Itau Unibanco involved with the implementation of the current document. Social and Environmental Risk Committee The Social and Environmental Risk Committee has to: Assess potential situations of non-compliance with this policy. Monitor the schedule for implementing this policy, defined by each business unit and its own compliance area. Check the authority levels determined in sector policies and procedures. Ensure compliance with this policy. Periodically review this policy. 3. PROHIBITED AND RESTRICTED ACTIVITIES 3.1 Prohibited Activities

2 The activities included in the List of the Prohibited Activities below are not compatible with the principles and values of Itau Unibanco: 1- Companies related to activities that encourage prostitution. 2- Companies that, in their activities, use child labor in disagreement with legislation. 3- Companies included in the national register of employers who have kept employees in conditions similar to slave labor, in accordance with the Executive Order No. 2 of May 12, 2011, adopted jointly by the Ministry of Labor and Employment and Department of Human Rights (Portaria Interministerial). Therefore, Itaú Unibanco will not assign credit to companies that develop activities in the conditions described in it. In case a company, after being assigned credit, starts to develop activities in the List of Prohibited activities, the Itaú Unibanco will take measurements to enforce compliance with this policy. 3.2 Restricted Activities The activities included in the List of Restricted Activities below represent greater potential of social and environmental risk: 1- Activity of production or sale of fire arms and ammunitions. 2- Activity of extraction and production of wood and production of firewood and charcoal from native forests. 3- Fishing activities. 4- Extraction and industrialization of asbestos/amianthus. Due to that, Itaú Unibanco follows specific procedures for assigning credit to companies that perform activities described in that list. 4. CREDIT PROCESS 4.1 Analysis for Credit Assignment Itaú Unibanco must observe whether the Company falls under any of the lists mentioned in item Formalization of Credit Operations In loans and financing, contractual clauses must be established with the following content: a) Borrower statement of the environmental regularity of its activities and the obligation of its maintenance during the effectiveness of the contract. b) Hypothesis of suspension of disbursements and early maturities of the loan if the Company: is involved in activities that encourage prostitution; (ii) uses child labor, in disagreement with legislation, or workers in conditions similar to salve labor; and (iii) does not observe environmental legislation. c) Obligation of the borrower to maintain Itaú Unibanco unhurt in the event Itaú Unibanco is held responsible by any third parties, including public authorities, for possible environmental damages caused by the Company. For financing, the specific social and environmental covenants for the Project to be financed must be observed Biotechnology Project Financing Itaú Unibanco requires the Certificate of Quality in Biosecurity issued by CTNBio (National Technical Biosecurity Commission) and any other documents required by law at the time financing related to the activity of research on Genetically Modified Organisms ( GMOs ) and their By-Products is contracted Environmental Licensing Itaú Unibanco must consider the environmental licensing process in financing Projects. For Project Finance, the criteria established by the Equator Principles must also be obeyed, in compliance with specific procedures Onlending Operations The rules of the agent who holds the funds to be used in onlending transactions must be respected.

3 4.3 Establishment of Real Estate Guarantee Contamination The acceptance of mortgage or trust receipt on real estate properties as guarantee in credit operations with Companies is preceded by a joint analysis of the appraisal report on the property and information on the use of the land. If there is evidence of contamination, an additional investigative report on possible contamination must be requested. If the existence of contamination is confirmed, regardless of its level, even if the land is already in the process of decontamination/remediation authorized by the proper environmental authority, the trust receipt of the property must not be accepted. For the establishment of mortgage, the requirements of each business unit must be observed. The contractual instruments for the establishment of the guarantee must contain clauses expressly providing for: a) The Company s responsibility for possible environmental damages that may be identified in the real estate b) The obligation of the Company to maintain Itaú Unibanco unhurt in the event Itaú Unibanco is held responsible by any third parties, including public authorities, for possible environmental damages related to the real estate c) The obligation of the Company to replace the guarantee originally offered and/or offer additional guarantee if, after the establishment of the mortgage or trust receipt, any environmental liabilities are detected on the Legal Reserve The establishment of guarantees in rural real estate properties must comply with the following rules: Real Estate Properties with Duly Registered Legal Reserve Guarantees accepted: mortgage and trust receipt. a) The registration of the legal reserve must be proven by means of the updated record of the b) Contractual clauses must be established determining: - The preservation of the legal reserve area; and - The reimbursement to Itaú Unibanco of any expenses or damages related to the non-preservation of the legal reserve. Real Estate Properties without Duly Registered Legal Reserve Trust receipts are not allowed.the only guarantee accepted is the mortgage, which must contain in the contract for its establishment a specific clause by means of which the client will undertake to, provided that the legal terms and procedures are met: 1- Register the legal reserve in the Real Estate Registry Office or CAR, presenting the respective request. 2- Comply with the other actions and terms stipulated by applicable legislation and the proper environmental authority, which are necessary for regularizing the legal reserve. 3- Reimburse the Bank for expenses that may be incurred in the establishment, preservation or reformation of the legal reserve. 4- Indemnify the bank for any damages or losses arising from environmental liabilities related to the real estate 5. IMPLEMENTATION AND MONITORING The implementation of this policy and the documents which it originates is a responsibility of the business units of Itaú Unibanco and their managers. The Social Environmental Risk Committee will be constantly updated about social and environmental issues and their respective risks, and will identify opportunities for improving the implementation of this policy. 6. AUTHORITY LEVELS AND COMMITTEES Sectorial and procedure policies must establish proper authority levels and committees for situations related to

4 the topics of this policy, which are previously reported to the Social and Environmental Risk Committee. 7. TRAINNING The Itaú Unibanco, more specifically its business units, trains professional of the internal areas involved in the implementation of this policy, aiming to skill them in its application. 8. TRANSPARENCY The Itaú Unibanco annually discloses information about the implementation of this policy in the Sustainability Report, complying with banking secrecy and with the confidential character of its client s information. The Itaú Unibanco has a communication Chanel to file complaints and suggestions related to this policy. Questions or suggestions can be sent to the Compliance that will proceed with the adequate internal forwarding. 9. RELATED DOCUMENTS This policy must be observed by Itaú Unibanco and must be read together with the following documents: - Itaú Unibanco s Code of Ethics - Corporate Policy of Ethics and Combat of Corruption and Bribery; - Corporate Sustainability Policy; - Corporate Policy of Prevention and Combat of Unlawful Acts; - Corporate Policy of Operational Risk Management; - Corporate Policy of Compliance; and - Voluntary Commitments. 10. GLOSSARY Companies: legal entities headquartered in Brazil, in the development of their activities inside Brazilian territory. Financing: these are credit operations whose funds are granted for a specific use, which is predetermined in a contract. Loans: these are credit operations whose funds are granted for a non-specific use, which is not predetermined in a contract. Project Finance: financing method in which the creditor primarily considers the revenue generated by a single project, both as source of payment and guarantee of risk exposure. This type of financing is usually used for large, complex and expensive facilities, which may include, for example, electric energy generating plants, industrial chemical plants, mines, and transport, environment and telecommunication infrastructure. Project Finance may equally serve to finance the construction of a new facility of capital or refinance an existing one, with or without improvements. In these operations, the creditor is almost exclusively paid with the funds generated by the contracts for the negotiation of the products of the facility, such as the electric energy sold by a generating plant. The debtor is usually a Special Purpose Entity (SPE) that is not authorized to develop any activity other than the development, dominion and operation of the facility. The consequence is that the repayment depends mainly on the cash flows of the projects, as well as on the value of the assets of the project offered as guarantee. (Source: Basel Committee on Banking Supervision. International Convergence of Capital Measurement and Capital Standards ( Basel II ), November Research: it is understood as the activities carried out in a laboratory, under containment conditions or in the field as part of the process for obtaining GMOs or assessing their biosecurity, which encompasses, at the experimental level, the construction, cultivation, manipulation, transportation, transfer, import, export, storage, release into the environment and disposal of GMOs. Social and Environmental Covenants: the counterpart is obligated, in general lines, to: (i) keep in line with the social environmental regulations and, when applicable, with the criteria of the Equator Principles; (ii) adopt measures to avoid, or when not possible to mitigate, the social and environmental risk of the transaction; (iii) inform the Itaú Unibanco about occurrences of relevant events of social and environmental nature. Voluntary Commitments: Itaú Unibanco has assumed, among others, the following voluntary commitments: (i) Global Pact, (ii) United Nations Environment Programme Finance Initiative (UNEP-FI), (iii) Equator Principles, (iv) Protocolo Verde (Green Protocol), (v) Pacto Nacional para Erradicação do Trabalho Escravo (Pact for Eradicating Slave Labor), (vi) Carbon Disclosure Project (CDP), and Principles for Responsible Investment (PRI).

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