44773 - Bansicredi CL Gr

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Summary of Investment Information

Project Number

44773

Company Name

Banco Cooperativo Sicredi S/A.

Date SPI Disclosed

Feb 24, 2021

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Mar 26, 2021

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Aug 6, 2021

Department

CF1S7 - Regional Industry - FIG LAC/FIG Inv Ops - CLA

Industry

Financial Markets

Previous Events

Approved : Mar 26, 2021
Signed : Mar 30, 2021
Invested : May 21, 2021

Sector

Commercial Banking - General

Project Description

The proposed investment consists of a 7-year loan of up to US$120 million to Banco Cooperativo Sicredi S.A. (Bansicredi or the Bank) to support the Bank’s sustainable energy finance (SEF) program focused on renewable energy (specifically photovoltaic) projects in Brazil

Associated Advisory Engagement

n.a

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	120.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Climate (not covered in any category)

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Project Outcome: Stakeholders effect - Increased access to climate finance: IFC expects that this Project will increase access to finance for climate finance in Brazil specifically through the engagement with the agriculture and energy sectors. Brazil is ranked as the 13th largest emitter in 2018 with 457MtCO2 per year and the agriculture and energy sectors are together responsible for over 60 percent of the GHG emission in Brazil. The Country is projected to continue to increase its emission stemming from the rapidly increasing agriculture production. Through the Project with IFC, Bansicredi will strengthen the operational capacity to better identify opportunities to expand its climate asset portfolio, promoting more sustainable agricultural practices. Bansicredi has an extensive reach in the rural areas and agribusinesses in Brazil, through which the Project will promote the sustainable practices in the agriculture production and the energy use. To measure the progress against this outcome, IFC will track the number and volume of outstanding climate-smart loans. Market Creation: Sustainability: IFC expects that the Project will contribute to an increased sustainability of the Brazilian financial sector by introducing a green funding instrument to finance green assets. An increased sustainability will be fostered via demonstration and replication, and innovation. IFC aims at achieving this via its partnership with Bansicredi, who will introduce a GLP certified funding, a first time use in the Brazilian financial sector. GLP compliant loans give transparency and comfort to the investors, as the principles provide clarification and guidance on use of proceeds permitted, process for evaluation and selection of assets, management of projects, and reporting. This way, the GLP effectively helps investors avoid opportunities that are "green washed". At the same time, GLP compliant loans may be more economically attractive for smaller institutions, for whom bond issuances are not a viable option.

Financing Structure - IFC will provide the Client with a US$120 million 7-year senior A-loan. The proceeds collected from IFC's funding will be transferred to Bansicredi through lending to its network cooperatives. In the Brazilian financial markets, currently syndicated loans with the tenor of seven years or longer are scarce. Innovative Financing Structure: IFC will provide the Bank with a senior loan that will be certified by a third-party certifier to be in aligment with the GLP. The Project aims to introduce a new funding instrument in the Country, which helps to ensure the integrity and transparency of the asset class while retaining flexibility and cost efficiency Knowledge, innovation, capacity building and standard setting: IFC will play an important role in providing climate-related guidance and tools to the Bank to contribute to the operational capacity of the Bank to expand its green asset portfolio

E&S Category Rationale / Risks and Mitigation

The Project will support Bansicredi's portfolio of small photovoltaic energy projects (up to 2 MW) in Brazil and has been classified as Category FI-2, according to the IFC's Sustainability Framework. Targeted sub-clients are individuals and SMEs. As part of the Project, Bansicredi will be required to screen sub-projects against IFC's Exclusion List and national applicable E&S laws. The Project will not support coal related activities.

The key risks and impacts derive from Bansicredi's capacity to identify and manage the potential E&S risks associated with supported activities. The Bank's eligible solar portfolio under the Project is composed of individuals and SMEs. E&S risks are considered medium to lo low and mainly associated with occupational health and safety labor issues during the solar panel setting up. Solar projects of more than 2 MW generating capacity will not be eligible.

Summary of Client Environmental and Social Management System (ESMS)

To manage the E&S risks, Bansicredi has implemented an ESMS that includes roles and responsibilities, screening procedures for undertaking E&S risk assessment and monitoring. Procedures are implemented by trained staff including four full-time dedicated E&S professionals. Procedures are defined by the E&S team in headquarters and applied in the Bank country network through automated system tools and checklists. Monitoring is focused on the setting up phase until the solar panels installation, after which E&S risks are expected to decrease. Through website, corporate phone (voice and text) contact, Bansicredi can receive and respond to third party concerns. As part of the Project, the Bank will be required to: (i) maintain its ESMS to screen the eligible portfolio against the applicable requirements; (ii) remain committed to applying the labor standards established by the IFC Performance Standards; and (iii) submit a periodic report to IFC in a form to be agreed with parties.

Contacts

For Inquiries About the Project, Contact

Banco Cooperative Sicredi S,A.
Fábio Magalhães Nunes
Corporate Finance Manager
(51) 3358-8710
fabio_nunes@sicredi.com.br
Av. Assis Brasil, nº 3940, Jardim Lindoia – Porto Alegre/RS
https://www.sicredi.com.br/site/home

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

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Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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