Climate change adaptation by Banco do Brasil

Who are Banco do Brasil?

The company Banco do Brasil is Brazil’s first financial institution, founded over 200 years ago. Today it is the largest financial institution in Latin America.

Banco do Brasil does not limit itself to the traditional role of lending agent, but rather sees itself as a catalyst for sustainable development in the country. The bank offers a range of environmentally and socially responsible products and services for its clients, such as special investment funds and lines of credit for investments in sustainable agricultural activities, forestation and reforestation, agro-ecology, organic production, and reduction and absorption of greenhouse gases.

It also has a dedicated business strategy called Sustainable Regional Development (DRS), which helps clients examine their entire value chain to craft a DRS business plan. The plan then supports a range of complementary inputs such as training, linkages to cooperatives and associations, introduction of new technology, fostering of an entrepreneurial culture, and access to credit.

What was done?

Banco do Brasil is the country’s largest lender to family farms, which are an important source of food, jobs, and revenue for the country. The bank sees farmers as potentially valuable change agents in addressing the impacts of climate change.

In March 2010 Banco do Brasil defined the conservation of water resources as the principal focus of its sustainability initiatives. Agua Brasil (“The Brazil Water Programme”) is an example of how Banco do Brasil is exploring connections among water conservation, good agricultural practices, environmental restoration, forest conservation, and climate change adaptation and mitigation. This nexus is an important one in the Brazilian context, given that 29 percent of land in the country is dedicated to agricultural-livestock production activities, 82 percent of Brazil’s water is consumed by the rural sector, and Brazil is anticipating adverse impacts of climate change on both water resources and the agricultural sector.

In 2010, Banco do Brasil forged a partnership with the National Water Agency (ANA) and the WorldWide Fund for Nature (WWF)-Brasil to develop the Agua Brasil
programme. The programme’s objectives include:

  • Promote societal awareness and attitudinal change with respect to environmentally sound water resource management and conservation.
  • Through the implementation of pilot projects in key watersheds, identify and encourage the adoption of sustainable practices in agriculture, reducing its impact on natural resources and biodiversity, improving water quality, and expanding vegetation coverage.
  • Disseminate and replicate models and best practices for the management and conservation of the country’s water resources.
  • Review and update the social and environmental criteria Banco do Brasil it uses in its financing and investment process.
  • Review and refine business models aimed at sustainable regional development, and strengthen and expand the bank’s portfolio of financial products and services that offer incentives for and stimulate projects with socio-environmental characteristics.

Banco do Brasil and its Foundation are providing financing, overall conceptual guidance, and monitoring and evaluation for the programme out of the bank’s Sustainable Development Unit. Staff from various other business units—including Agribusiness, Credit and Risk, Distribution, and Marketing—are providing financial and technical expertise through dedicated working groups.

What were the outcomes?

For the pilot projects, the partners have identified 14 important watersheds, located in the Cerrado/Pantanal, Atlantic Forest, Amazonia, Caatinga, and Pampa biomes. Pilot projects will involve the creation of local water management plans, including water footprinting and training of basin committees and other stakeholders on improved watershed management. The aim is to increase the quality and supply of water and vegetation coverage in the pilot water catchment basins. Wide participation will be sought from farming communities, local government, and civil society groups. Good practices will be identified and piloted in the agricultural and livestock sectors, and may involve techniques that restore degraded resources, use of new technology that results in more efficient resource use, and payments for environment services. The programme will focus on generation of watershed-specific information and data to support farmers’ decision making, and will create a specialized training kit for wider
dissemination of good practices. The bank anticipates creating new policies around the themes of biodiversity, climate change, freshwater and forest based products to strengthen project analysis in the economic sectors that represent the bulk of the bank’s portfolio. These include agribusiness, energy, mining and metallurgy, and construction, which together represented 46 percent of the bank’s credit portfolio in 2011.

How does Banco do Brasil benefit?

Agua Brasil will enable Banco do Brasil to benefit from new business opportunities that result from its expended range of climate-resilient products and services,
as it uses its power within the banking industry to influence the practices of current and new clients. By revising its financing and investment criteria, the bank will have a refined ability to assess the principal risks associated with agricultural activities, and a heightened understanding of these risks throughout the value chain. As a result, Banco do Brasil will be able to not only promote sustainability, particularly regarding watershed management, but also significantly mitigate potential risks to its operations.

How do the local communities benefit?

Through Agua Brasil, family farms will adopt new practices that enable them to manage the impacts of climate change on their water source, land, crops, and livestock. They will lessen their impact on the surrounding ecosystem, which will have positive benefits for community resilience more broadly, and will also contribute to climate change mitigation. Farmers will have access to an expanded range of financial products and services, including credit, that incentive and assist them to implement these sustainable farming techniques and improve their livelihoods. The programme’s emphasis on dissemination of best practices, combined with supportive financial incentives, will ensure uptake of climate-resilient activities by farming communities across Brazil.

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