BBVA has announced its progress in its climate change strategy with the publication of its sustainability policy and its first report on the risks and opportunities associated with climate change according to the Task Force on Climate-related Financial Disclosures (TCFD) standard. This report entails the incorporation of climate risks in the management of all of BBVA’s businesses and the entity’s commitment to accompany its clients in the journey toward a more sustainable future.
“The presentation of our first TCFD report marks yet another milestone in our commitment to sustainability. An exercise in transparency that includes our progress in our governance model, strategy, risk management and metrics related to climate change,” explains BBVA chairman Carlos Torres Vila in the introduction to the report.
Promoted by the Financial Stability Board, this model recommends that banks describe how resistant their strategies are to risks (physical and transition risks) and the opportunities related to climate.
One year prior to the celebration of COP26 in Glasgow, BBVA has published this report, which also incorporates its stakeholder groups and the direct impact of BBVA’s activities on the environment.
Promoting the development of sustainable solutions is another key line of work underscored in this report. To this end, opportunities are identified in order to develop sustainable products and offer advice for individual and corporate clients.
The TCFD working group feels that: “Their widespread adoption [of this type of reports] will ensure that the effects of climate change become routinely considered in business and investment decisions. Adoption of these recommendations will also help companies better demonstrate responsibility and foresight in their consideration of climate issues. That will lead to smarter, more efficient allocation of capital, and help smooth the transition to a more sustainable, low-carbon economy,” stated the first report of recommendations of this working group in 2017.
In a single document, BBVA’s TCFD report also includes the main milestones in the bank’s commitment to sustainability – a journey that began in 2002 when BBVA joined the United Nations Global Compact and later adopted the Equator Principles in 2004. In 2007, BBVA first supported sustainable finance, participating in the European Investment Bank’s (EIB) issuing of a green bond. In 2008, the pension plan for Spanish employees was the first to subscribe to the Principles for Responsible Investment. A decade later, the bank presented its Pledge 2025 to help fulfill the United Nations Sustainable Development Goals and the challenges derived from the Paris Agreement on Climate Change.
The process culminated early in the year with the incorporation of sustainability as one of BBVA’s strategic priorities and the launch of an ambitious transformation plan.
BBVA is facing a decisive decade in the fight against climate change with the internal reorganization of sustainability initiatives through the creation of the Global Sustainability Office, which has the support of top-level executives of the different areas of the bank on a global and local level.
This represents an organizational change in order to accelerate and promote sustainability across the board as a new strategic priority and make it a reality in all areas. The Global Sustainability Office was built based on the efforts already put in place related to sustainability, leading a single development agenda, aligning the work of the different areas of BBVA in their strategies and action plans and supporting the new skill building among employees. In fact, on September 28th, BBVA became the first bank in the world to provide mandatory sustainability training for all employees.
TFCD Report 2020
Risk management and internal taxonomy
BBVA has established a classification that divides its risks into: physical risks, which are direct consequences of climate change caused or fostered by extreme weather events and potential physical damage to the bank’s assets in the long-term; and transition risks, which are those risks that are the result of the shift toward a low carbon economy (such as legislative changes, variation in consumption patterns, etc.) that entail the incorporation of climate change into the planification of business risks.
As a result of this exercise, with data up to June 30, 2020, 9.7 percent of exposure at default corresponds to wholesale banking sectors with a very high, high or intermediate level of sensitivity to this risk.
TCFD Report 2020
This first TCFD report also summarizes the direct impact of BBVA’s activity on the climate. In this regard, in the framework of the United Nations Conference on Climate Change (COP 25) held in Madrid in December 2019, BBVA announced the incorporation of an internal price for CO2 emissions. The goal is to be carbon neutral as of 2020 by compensating for its residual emissions with carbon capture projects, which also have a positive impact on the local communities where they take place.
BBVA continues working to reduce its environmental footprint through the Global Eco-efficiency Plan. In 2019, the group’s environmental footprint was very positive with respect to the previous year, with an eight percent reduction in CO2 emissions (according to the market-based method), a five percent reduction in electricity consumption, a 23 percent decrease in water consumption and a 19 percent decline in paper (all reductions are per person). The percentage of renewable energy consumption remained at 39 percent, and reached 49 percent at the end of the year for those working in buildings with environmental certification.
Together with this TCFD report, the bank has also released its General Sustainability Policy, which makes helping clients in the transition toward a sustainable future a priority. According to this policy, climate change and inclusive and sustainable social development will be the main focus areas for BBVA in terms of sustainability.
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