BCB Proposes Sustainability Criteria for Granting Rural Credit
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 Article
ACPR Launches Test Environment for New Data Collection ApplicationRelated Articles
FINMA Approves Merger of Credit Suisse and UBS
The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
MFSA Sets Out Supervisory Priorities, Issues Reporting Updates
The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023
German Regulators Issue Multiple Reporting Updates for Banks
Deutsche Bundesbank published the nationally deactivated validation rules for the German Commercial Code (HGB) users on the taxonomy 3.2, which became valid from December 31, 2022
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.