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Making COP count

Santander Brasil: moving financial markets to greener ways

Author: ICAEW

Published: 15 Dec 2023

green trees forests in the shape of lungs with blue rivers on green background

The Brazilian arm of the international bank has taken several steps to distinguish itself as an award-winning agent of change.

In 2008, the Brazilian arm of Santander merged with Banco Real – the Brazil-based subsidiary of ABN Amro. The purchase proved to be more than just a smart business deal.

“Banco Real had a very strong track record in sustainability,” explains Leonardo Fleck, Santander Brasil’s Senior Head of Sustainable Innovation. “So we inherited a lot of their best practices.”

In the following years, sustainability took on increasing relevance among Santander’s corporate clients, who wanted to get more involved with solar or wind-power projects. At the same time, Brazil developed a strong policy on the decarbonisation of biofuels. 

“We have clients in that segment, too,” says Fleck. “We have also seen significant trends over the past decade or so with deforestation in Brazil, which have affected appetites to invest in our country.”

In 2017, that combination of factors prompted Santander Brasil to carry out a full-scale strategic review of its operations – a process that led to a seamless integration of sustainability into the bank’s DNA, says Fleck.

Targeting finance

As a result of that review, Santander Brasil put sustainability goals at the heart of the bank’s activities and ambitions. For example, every year, the bank updates its Strategic Planning (SP) initiative with new environmental, social and governance (ESG) targets, with significant impacts for its commercial and administrative teams. Variable compensation of all employees is either directly or indirectly linked to their performance in ESG-related business endeavours.

Each month, the finance department presents the CEO, Chairman and other top decision-makers with a sustainable finance performance dashboard to enable close monitoring at senior level. A broader ESG dashboard is shared every quarter with the top leadership.

Santander Brasil has also recently spearheaded its nation’s first-ever ESG-linked loan, pioneered the issuance of green bonds for Brazil’s transport and logistics sector and played a key role in creating a local market for biofuel decarbonisation credits (CBios). Since 2020, the bank has facilitated around R$110bn of sustainable business transactions, and R$32.2bn of investment in ESG-related firms in 2022 alone.

The same year, it launched a R$17m green agribusiness receivables certificate – known by its Portuguese acronym as the CRA – to tackle credit shortages for 22 eco-businesses and cooperatives that support around 4,500 producers working on sustainable agriculture projects and initiatives to help regenerate degraded lands, particularly in the Amazon.

It has also built Brazil’s largest private scheme for providing targeted microcredit loans to entrepreneurs in disadvantaged communities; a programme with more than one million active clients. It has taken a leading role in advising on and financing local renewable energy projects, including around one-third of all Brazilian wind farms built since 2009.

“Brazil now has a much cleaner energy matrix than it did before,” Fleck says. “A few years ago, the output from solar was relatively insignificant. Now it counts for more than 6% of the energy produced in the country, and it’s rising all the time. It’s grown very quickly in a short period, all thanks to innovative financing models.”

A transformational standard

Santander Brasil has distinguished itself with a desire to create change in its industry through collective action. In July 2020, it announced an alliance with Brazil’s other two largest banks – Bradesco and Itaú Unibanco – to drive sustainable development in the Amazon, under an effort dubbed the ‘Amazon Plan’. It, along with other banks, created a voluntary standard with Federação Brasileira de Bancos (Febraban), signed earlier this year by 22 financial institutions. 

Fleck notes that no other banking federation in the world has taken that step on deforestation. While still in the early stages, the signatory banks are currently working alongside Febraban and other bodies in Brazil, such as Associação Brasileira da Indústria de Exportação de Carne (ABIEC – the Association of Brazilian Meat Exporters), to define how the standard will be implemented. “We think that, as time goes on, it could be transformational.”

Santander Brasil shares best practices that have emerged from its work as part of the Amazon Plan. Based on those, the Federation is working with its members to develop a more robust framework than what we had before.

Setting benchmarks

In March, the bank announced the acquisition of an 80% stake in Brazil-based ESG consultancy WayCarbon, which advises corporate clients on how to cut emissions in their operations and supply chains. At COP 27 in Egypt, it unveiled Biomas: a business created in partnership with a group of other banks and commodity companies. Biomas aims to plant two billion native trees and restore four million hectares of Brazilian forest over the next 20 years, ultimately taking around 900m tonnes of CO2e out of the atmosphere.

“Biomas is also seeking to be recognised as the benchmark setter for high-quality carbon credits from forests, covering social, carbon and biodiversity aspects,” Fleck explains. “Next year, we will start implementing its first projects. With these two companies, we’ll be able to do even more to help our clients along their decarbonisation trajectories.”

Units of change

In October last year, Santander Brasil promoted its former Corporate Bank Chief Operating Officer Maite Leite to the role of Institutional Executive Vice-President. Under her direction, the bank aims to achieve a tighter coordination between the various sustainability specialists who are embedded across the business.

As part of that approach, the client-facing arm was divided into two units: Sustainable Finance, which will build out the bank’s range of sustainability-based financial products and relevant transactions, and Sustainable Innovation – Fleck’s division – which will focus on emerging technologies and sectors. In addition, there is a Sustainability area with the mandate to define the broader strategy and oversee the whole of the Sustainability ecosystem at Santander Brasil.

Fleck’s unit will foster the development of new business frontiers linked to the climate and biodiversity agendas, including bio methane for energy and transportation, low carbon agriculture – encompassing cacao, beef, milk and soy – and e-mobility, helping to decarbonise transportation. “There’s lots of work to do,” he adds, “particularly in terms of looking at how we can work with larger agriculture companies and their supply-chain partners. We also need to do lots of work on data. The more we measure and the more information we have, the easier it will be for us to refine our objectives.”