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    What do Banks Have to do With Climate Change?

    Banks are engines for economies and agents of change in societies

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    All Banks are engines for economies and agents of change in societies. This is how the United Nations (UN) understood it and promoted, in 2019, the Principles for Responsible Banking, hand in hand with the UNEP Finance Initiative.

    The genesis of these principles lies in a specific question: what do banks have to do so that sustainability, in the financial sector, advances faster and, therefore, countries too?The answer: align the strategies of financial institutions with sustainability, focused on the 17 Sustainable Development Goals (SDGs) and the Paris Agreement. To this end, six principles were created to guide the transformation in banking.

    In 2019, BancoPromerica was the first Costa Rican bank to subscribe to the Principles for Responsible Banking, becoming a founding signatory of these. Based on them, we strengthened our sustainability strategy:

    Principles:

    • Principle 1 – Alignment: that the bank’s strategy is aligned with sustainability. This implies knowing how much of our portfolio is contributing to sustainability issues.
    • Principle 2 – Impact and goal setting: that we set goals with measurable and achievable goals in a certain period of time.
    • Principle 3 – Clients and users: know our portfolio, identify the positive and negative impacts. At BancoPromerica we have been working on measuring the emissions in our portfolios to reduce them.
    • Principle 4 – Interested Parties: make our work in sustainability expand and also reach out to collaborators, suppliers, multilateral organizations, regulatory bodies and other stakeholders.
    • Principle 5 – Governance and culture: this is extremely important because if there is no good governance within the bank to address these issues, it will be difficult for us to fulfill the commitments made.
    • Principle 6 – Transparency and Responsibility: not only do we have to show our progress and achievements in the annual sustainability report, but we must also audit these advances.

    A couple of years after signing the Principles for Responsible Banking, we were the first Costa Rican bank to also sign the Net Zero Banking Alliance.The UN, with this alliance, clearly established the horizon: the impact of banks on climate change is not in our operations, but in the projects we finance.

    BancoPromerica has been a pioneer in many areas related to sustainability: we have a compost bin, we have installed charging centers for electric vehicles and several of our branches; In addition, we have LEED certification and solar panels; but none of this is as relevant as making our portfolio increasingly green: that our business clients change their fleets of gasoline vehicles for electric ones or that their production processes are more efficient in the use of energy and natural resources.

    Moving faster towards achieving the SDGs

    And it is that, if we manage to get banks to finance more and more sustainable projects, the world will move faster towards achieving the SDGs.The Net Zero Banking Alliance, an agreement between financial entities, has the goal of bringing the loan and investment portfolios of the signatory banks to zero greenhouse gas emissions by the year 2050; this to align the financial sector with the Paris Agreement.

    Here our challenge is to lead our clients to be carbon neutral. To comply with this alliance, first of all, we estimate and report our greenhouse gas emissions based on the PCAF (Partnership Carbon Accounting Financials) methodology.

    Then we set our science-based targets to determine how much and how soon we need to reduce our emissions to align with the Paris Agreement. For this, we work with the Science Based Targets methodology.

    Finally, based on the standards developed by the Task Force on Climate-Related Financial Disclosures (TFCD), we will issue our climate-related information reports for have clarity on how best to manage the risks and opportunities related to climate change.

    Being members of the Principles for Responsible Banking and of the Net Zero Banking Alliance helped us a lot to “order the house” in the sense of clearly determining what we are doing in relation to each of the principles and thus making more, better progress. and faster. It also helped us write down, in specific policies, what we do to be able to report to the United Nations and our internal and external stakeholders.The biggest challenge we have? Lead our clients towards sustainability and transform the transport and agribusiness sectors.

    Our path is clear: “if there is no planet, there are no banks”. For this reason, our vision is that the world we want must be within the limits of our planet and in order to be there, we have to support our clients to go down this same path. And it is in two ways: how we can help them reduce their emissions and finance more transition projects and climate action.

    Sustainability implies social, economic and environmental stability; and climate change affects everyone, especially the most vulnerable people and sectors. Banks have the tools and resources to make a positive impact and make sustainable development progress faster…much faster!

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