Case BNDES

Financed Emissions Accounting at National Scale

  • Client: BNDES
  • Sector: Banking
  • Scope: Financed Emissions
  • Tag: Scope 3 (Category 15)
The Challenge
For Financial Institutions, climate change presents not only environmental and impact management challenges, but also complex social and economic implications. The Brazilian Development Bank (BNDES) has a long-standing commitment to socio-environmental and climate management, and it is a key player in the Brazilian climate finance ecosystem.

Particularly for banks, greenhouse gas (GHG) emissions are concentrated in the allocated capital, mostly through investment and debt instruments. Therefore, effective, cross-cutting climate management in financial institutions requires the development and monitoring of strategic indicators, such as financed and avoided emissions, and the subsequent convergence of these indicators with traditional aspects of risk management, strategy, portfolio management, and engagement with clients, investees and peers.

Our work

BNDES Financed Emissions engagement was developed with broad sectoral coverage of loan portfolios and equity holdings. The exercise allowed for both a granular view, at the operational level, and a strategic view of the bank’s portfolios and its climate performance.

Significant methodological advances were made in the area of avoided emissions, designing metrics that are closer to the existing project selection and monitoring processes, relevant for the entire credit portfolio and instruments such as the Climate Fund.

As a key innovation, the project delivered a tool to support the bank to continuously monitor and update its financed emissions accounting. Considering the complexity of BNDES’ portfolio, and its country-wide operational scale, the tool provides significant support for the portfolio alignment effort and the bank’s decarbonization ambitions.

Results

WayCarbon’s methodology for developing climate strategies in financial institutions starts with key indicators for robust modelling of the sector’s emissions profile and portfolio positioning in the face of climate scenarios. 

The results directly feed BNDES’ Guidelines for Climate Change, its transversal platform of strategies and commitments for a just transition, by allowing the effectiveness of its climate investments to be monitored robustly. The comprehensive coverage of the indicators also places BNDES in global prominence in the calculation of financed and avoided emissions, allowing the bank to be strategically positioned to lead methodological discussions and collaborative initiatives within the financial system.