BCB proposed standards that define the sustainability criteria applicable to the granting of rural credit and the characterization of enterprises with restrictions on access to rural credit due to legal or non-legal provisions related to socio-environmental issues. This consultation constitutes the first initiative that is part of the BCB Agenda on sustainable finance (launched last year) and the comment period for this consultation closes on April 23, 2021.
The proposal clarifies that the application of sustainability criteria will result in the following categorization of projects:
- Projects that cannot be financed with rural credit, due to the existence of legal provisions that prevent granting of financing.
- Projects that may be financed with rural credit, with a signal to financial institutions that the operation represents socio-environmental risk; these projects shall not be classified as sustainable operations.
- Projects that may receive the classification of sustainable operation, due to compliance with socio-environmental sustainability parameters, such as low-carbon agriculture, water supply, or use of renewable energy generated on the property.
These criteria will be part of the Rural Credit and Proagro (Sicor) Operations System and will help financial institutions improve their socio-environmental risk assessment processes. The information related to sustainable operations may be used by other financial institutions, certifiers of sustainable credit securities, rating agencies specialized in ESG criteria, and contracted service providers to audit the adherence of ventures to socio-environmental requirements, to allow the issuance of green bonds. In addition, agricultural policy makers might also use the information to grant additional incentives to sustainable rural enterprises.
Related Links (in Portuguese)
Comment Due Date: April 23, 2021
Keywords: Americas, Brazil, Banking, Sustainable Finance, Rural Credit, Credit Risk, ESG, BCB
Previous ArticleACPR Launches Test Environment for New Data Collection Application
The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA
The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.
The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.
The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.
In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.
The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.
The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).
EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.