An Emerging EconomyExperience

Seminario Sector Financiero Mexicano Y Medio Ambiente

Cris Ronza

Where is the catfish?

The New York Times

International Herald Tribune

Government

Unhappy with Brazil’s anemic rate of growth,President Luiz Inácio Lula da Silva has made thezeconomy the top priority of his second term, whichbegan in January. Large public works projects,including the dams here on the Madeira River areincluding the dams here on the Madeira River, areenvisioned as one of the best ways to stimulate growth.“Who dumped this catfish in my lap?” was thepresident’s irate complaint when he learned recentlythat the government’s environmental agency hadrefused to license the dam projects, according torefused to license the dam projects, according toBrazilian news reports.

NGOs

NGOs

“Public Banks, such as theEuropean Investment Bank,which already has Odebrechtamong its Brazilian clients, asamong its Brazilian clients, aswell as the World Bank and theIDB, must meet certainsafeguards and considerations

i h iconcerning the socio-environmental risks that shouldbe considered in the financingof such projects with enormousp jimpacts on the Amazonregion.”

What Financial Institutions have to do with it?

Reputation risk

Shareholder risk

Credit risk: default

Collateral: depreciated assets

I t d dInterdependency & Engagement

Interdependency

E l

ClientGovernment

Employees

Banco Real

Shareholder

Investors

Banco Real

Union

MediaCommunity

S liSuppliers

Environment

L diChallenges and Lessons

Leadingby We don’t have all the answers but weby

ExampleWe don t have all the answers, but we are not afraid of questions. We have to discuss the issues

Integrate social and environmental aspects into our products, processes and policies

Coherence and interdependence

Invest in the education and engagement f ll ff bof all staff members

From risk to opportunity

Business consistentwith Sustainable DevelopmentBusiness consistent

Interacts withCore Business•Suppliers•Diversity•Sustainability Report•Ecoefficiency

•Social and environmental risk policy•Social and environmental products •Ecoefficiency

•Social Investment•Social & environmental training & education

products•Responsible Investment funds•Microcredit

CredibilitMarket Management

Credibility Social Action

Does it work?

Social and EnvironmentalEnvironmentalRiskRisk5,000 companies screened

Cl d l i hi i h 46Closed relationship with 46 clients (more than 46 new clients)

More than 3,000 managers and financial analysts were trained

Equator PrinciplesEquator Principles

S i l d

Does it work?

Social and Environmental

FinancingRecent partnership with IFC (US$200 million credit line) and

A process of continual growth

(US$200 million credit line) and BNDES

Facilities for companies: water treatment renewable energytreatment, renewable energy, power efficiency

Social and Environmental financing portfolio in 2006:a c g po t o o 006:

8,351 loansUS$ 78,3 million

Biodiesel Sustainable Business

and Wind PowerFi d 4 i d k (199 3 MW h t

In the past 24 months, ABN AMRO Real has:

Financed 4 wind parks (199.3 MW – enough to meet the needs of 4 million people)

Financed biodiesel plants, with the capacity to meet 25% of the domestic market

Supported projects that allowed the creation of approximately 70 000 new direct and indirectapproximately 70,000 new direct and indirect jobs

Sustainable Business

Carbon Credits

• First financial institution to close carbon credit transactions in Brazil

• Leader financial institution in number of deals

S liDoes it work?

SuppliersFrom 15 suppliers in 2001 to 150 suppliers in 2006

Social and environmental criteria in selection and management of suppliers

Ethical FundDoes it work?

Ethical Fund

2001 2002 2003 2004

Fundo Ethical II 12.2% 1.6% 67.5% 35.9%

IBVSP Medio 11.3% -17.6% 97.0% 17.8%

2005

26.6%

27.1%

2001-2007 return

469.60%

334.5%

2006

34.8%

33.7%

2007*

28.67%

20.3%

Patrimônio (R$ M) 3.1 14.7 33 75.2 105.5

** 2001-2007

187.7 631.8

*August

Sustainability Index

Engage stakeholders to build together

• Equator PrinciplesEquator Principles Version 2

• Unibanco, Bradesco, Banco do Brasil, Itaú, , ,Itaú BBA

• Workshop 50 FI

Does it work?

74 Efficiency and performance35

i 2006 & 2007

74Awards Sustainability28

in 2006 & 2007 Human Resources + Marketing11Sustainable Emerging Markets Bank of the Year

Challenges and Lessons

Succeed,,doing the right things

the right waythe right way