ESG risk management

ESG risk management and governance (Environmental, Social and Corporate Governance)

CaixaBank manages its business, products and services within the framework of its commitment to respect people and local communities. It coherently supports the most environmentally friendly initiatives and projects that contribute to prevent, mitigate and respond to climate change.

One of CaixaBank's objectives is to apply and integrate its procedures and tools for identifying, assessing, and following up on the climate and environmental risks derived from its activity with customers and transactions to be applied and integrated in its standard risk, compliance and operations processes. 

The company has a specialised team for climate and environmental risk management which includes the following courses of action:

• Define and manage an internal climate and environmental risk management plan in accordance with the Group's strategy.
• Define and manage the implementation of a framework of sectorial concessions and management policies to allow us to maintain a risk profile in line with said strategy.
• Monitor actions and operations with a significant potential impact on climate and environmental risk.
• Incentivise practices to mitigate climate and environmental risks taken on as a result of its portfolios or actions across the board.
• Promote the development of systems to identify and measure its exposure to climate and environmental risk, in accordance with the regulatory framework, social awareness of these risks and the best market practices.

Additionally, there are specialized personnel dedicated to managing sustainability risks along the 3 Lines of Defense, including the Business, Risk, Non-Financial Risk and Audit functions.

Sustainability Committee

The Sustainability Committee is the highest executive body specialised in managing sustainability risk. It directly reports to the Management Committee and, when applicable to sustainability risk policies, to the Global Risk Committee, which refers the required aspects to the Risk Committee.

More about our Governance system

Sustainability Division

The Sustainability Directorate is responsible for defining the guiding principles for managing ESG risks and providing advice.

Reputational risk support service

Internal service organised by the Communication and Institutional Relations Department that contributes to compliance with the Corporate Reputational Risk Management Policy, providing support to the branch network and other corporate departments.

Analyses queries about potential transactions that may be in breach of codes of conduct or that may have an impact on the bank's reputation.

• 284 queries handle in 2023
• 18 % queries related to the Corporate Sustainability/ESG Risk Management Policy

ESG (Environmental, Social and Corporate Governance) and climate-related risk management procedures

Operating principles of the Corporate Policy for managing sustainability/ESG risks

At CaixaBank, we have laid down a global framework for managing sustainability/ESG risks, which is one of the core lines of action of our strategy for managing this type of risk.

The Principles of Action of the Corporate Sustainability/ESG Risk Management Policy apply to the customer onboarding processes, the approval of corporate or project finance transactions and own-account investment in fixed-income securities and equities. They lay down a series of general and sector exclusions on activities that could have a material impact in this field, as well as the requirements under which CaixaBank will not assume risk.

The general exclusions are applicable to customers and financing and investment transactions in fixed income and equities in any sector and essentially refer to the non-violation of human rights. Sector exclusions apply to sectors with greater potential exposure to sustainability risks:

• Energy
• Mining
• Transport and infrastructure
• Agriculture, fishing, livestock and forestry
• Defence and security

The analysis of ESG risks forms part of the customer onboarding process (ESG onboarding) and the financing acceptance process; for all customers and transactions within the scope of the Policy.

As part of the analysis, consideration is given to environmental, social and governance risk, including aspects related to the company's ESG control framework and the existence or otherwise of ESG issues, decarbonisation strategy, as well as compliance with the Equator Principles, if applicable. In other words, a holistic due diligence analysis of customers from an ESG perspective.

As a result of the assessment of ESG risks, CaixaBank may approve a determining sanction for the customer's onboarding (ESG onboarding) and to grant financing transactions to customers or project financing (Environmental Risk Report).

To ensure the proper execution of these processes, we have operational procedures and guides that are updated annually. Also, we have centralised teams of specialised full-time analysts who carry out evaluation processes from a sustainability perspective. These ESG risk assessments are integrated into our customer onboarding process (ESG Onboarding Analysis) and the process of admitting financing operations (ESG Onboarding Analysis and Environmental Risk Reports). Additionally, we have other specialised teams dedicated to managing sustainability risks, including Business, Risk, Compliance and Control, and Audit.

Access to Operating principles of the Corporate Policy for managing sustainability/ESG risks 

CaixaBank approved a circuit for intra-CaixaBank Group coordination in relation to serious ESG controversies linked to companies with which the Group has or seeks to have a position and which could potentially involve a violation of the Corporate Sustainability Risk Management Policy or other policies. To this end, a delegated Working Group of the Sustainability Committee has been set up to analyse and give an opinion on the seriousness of the potential violation. Alerts on potential controversies may come from external or internal sources.

Climate and Environmental Risk Management

At CaixaBank, we actively manage environmental and climate change-associated risks. Based on the assessment of the materiality of ESG risks in their interrelationship with the risk catalogue, we have prioritised climate risks in the phased deployment of ESG risk management.

In accordance with the best sectorial, supervisory and regulatory practices, we are making progress in our management and analysis of environmental risks and risks derived from climate change, which are classified as physical risks and transitional risks.

At CaixaBank, ESG risk (sustainability) is considered a transversal factor with an impact on several risks in the Catalogue (credit, reputational and other operational risks), adding references to climate change and other environmental risks to the definitions of legal and regulatory risk. Liquidity and market risks are not specifically mentioned given the low level of materiality applicable to them. However, in any case it has been assessed that the stress tests conducted are of sufficient magnitude to include impacts in these areas of climatic origin.

Management of the credit portfolio seeks to align the indirect impact on climate change with risk appetite and with the commitment to its sustainability objectives. To this end:

• Since 2020, we have been conducting qualitative scenario analyses for climate risks in the form of heat maps.
• Since 2023, we have had a quantitative framework in place for measuring climate risks. This framework enables forecasting and monitoring the impacts of climate risk on credit risk, with the aim of reinforcing the comprehensive process of assessing climate risks.

Furthermore, exposure to taxonomy activities is also monitored. In 2020, the European Parliament and the EU Council adopted Regulation (EU) 2020/852 (Taxonomy Regulation), establishing uniform and common criteria in the European Union to determine if an economic activity can be considered environmentally sustainable. In accordance with this regulation:

• In 2021, we published for the first time the eligibility ratios for the first two environmental objectives (climate change mitigation and adaptation). In 2023, we published the eligibility ratios for the remaining four objectives and the new activities added in 2023 to the climate objectives were first published.
• In 2023, we published for the first time the GAR (Green Asset Ratio) for the objectives of mitigation and adaptation to climate change of old activities (before the incorporation of new activities in 2023).

In 2024, we issued our seventh green bond for €1.25 billion. At the end of the year, we had completed a total of eight green bond issues since starting out in 2020, amounting to a total of €7.15 billion. The green eligible asset portfolio falls under SDGs 6, 7, 9 and 11.

Furthermore, CaixaBank has been a signatory to the Green Bond Principles since 2015, established by the International Capital Markets Association (ICMA). Since then, we have participated in the placement of green bonds for projects with a positive climate impact.

Access to the SDG Framework 

Task Force on Climate-related Financial Disclosures (TCFD)

CaixaBank is committed to complying with the transparency recommendations of the TCFD, a working group of the Financial Stability Board whose objective is to increase the relevance of climate risks and opportunities through reporting, with the aim of boosting their consideration among participants in financial markets.

A summary of progress derived from the initiative is compiled each year in the CaixaBank Management Report. 

Since 2019, at CaixaBank we have actively participated in the UNEP FI pilot project to implement the TCFD recommendations in the banking sector (TCFD Banking Pilot Phase II and III). The case studies prepared by CaixaBank in the framework of the pilot have been included in the reports “Pathways to Paris. A practical guide to transition scenarios for financial professionals” and “Leadership strategies for client engagement: advancing climate-related assessment”, on the UNEP FI website.

Access to the CaixaBank Management Report

Responsible Banking Principles (RBP)

On 22 September 2019, CaixaBank ratified its adherence to the Responsible Banking Principles of the United Nations, promoted by the UNEP FI. The signing of and compliance with the Principles are aligned with the commitment to 'Be pacesetters in responsible management and our commitment to society', a strategic line established in the Institution's 2019-2021 Strategic Plan. The objectives of the Responsible Banking Principles are:

• Establish a framework for sustainable finance in the 21st century
• Align the banking industry with the Sustainable Development Goals and the Paris Agreement
• Allow banks to demonstrate and communicate their contribution to society
• Promote the connection with customers, the establishment of specific objectives and transparency through public reporting 

Signing the Principles entails aligning strategy and management with the Sustainable Development Goals and the Paris Agreement, establishing objectives and reporting their state of progress annually. 

Net Zero Banking Alliance

In April 2021, CaixaBank signed up -as a founding member— to the Net Zero Banking Alliance (NZBA), a partnership driven by UNEP FI whereby we commit to achieve net zero emissions by 2050 and to set interim decarbonisation targets by October 2022. Signing the NZBA implies a boost to ambition with respect to commitments previously made by CaixaBank, such as the Collective Commitment to Climate Action, since it requires alignment with the goal of limiting the temperature increase to 1.5°C with respect to pre-industrial levels.

As steps prior to setting objectives, the following milestones were reached:

• Adherence to the Partnership for Carbon Accounting Financials (PCAF). PCAF is a global partnership of financial institutions whose goal is to establish an international standard for measuring and disseminating financed greenhouse gas (GHG) emissions.
• Calculation of emissions financed (Scope 3, category 15 of the GHG Protocol). Progress has been made in estimating the financed emissions based on the PCAF methodology for mortgage portfolio assets, debt securities, equity instruments and corporate loans and advances.
• Assessment of the materiality of ESG risks, geared towards the transitional climate risks of the most potentially affected sectors on the basis of detailed heatmaps. This analysis, together with the emissions calculation and sector breakdown, helped to determine the sector portfolios to be prioritized.

We have set intermediate decarbonisation targets for 2030 for our financing and investment portfolios, specifically in the sectors with the highest intensity of greenhouse gas emissions electric, oil and gas, automotive, iron and steel, agriculture, real estate (residential and commercial), aviation and shipping. No decarbonisation targets have been established for the aluminum and cement sectors because they are not considered materials in the financing portfolio.

Additionally, we will stop financing companies involved in thermal coal activities (those clients whose revenues from thermal coal mining and/or coal-fired power generation exceed 5% of the total), reducing our exposure to zero by 2030 (phase-out).

Learn about our intermediate decarbonisation targets

Access the Climate Report

Access to Net Zero Bankin Alliance