The Role of BNDES in fostering sustainable development June 2012

BNDES at a Glance

Values Commitment to the country’s development, ethics, public spirit and excellence. Vision To be the development bank of Brazil, innovative, outstanding, and to proactively tackle the current and relevant challenges of our society. Mission To foster sustainable and competitive development in the Brazilian economy, generating employment, while reducing social and regional inequalities. Mission, Vision & Values

Main provider of long-term financing in Brazil 100% state-owned company under private law Institutional funding Instruments  Direct operations  Indirect operations  MSME (financing & guarantee)  Exim  Project finance  Equity investments  Grants BNDES at a glance

Infrastructure Heavy Industry – Consumer Goods Small and Medium-Sized Enterprises 50s60s70s80s90s00sToday Technologic Development Imports Substitution Energy Agribusiness Exports Privatization Program Urban and Social Development Innovation Sustainability Small Business Social Inclusion and Environmental Issues BNDES development in time Adapting to the varied stages of Brazil´s development, having the means – resources and instruments - to accomplish mandates

66 BNDES as a promoter of sustainable development -Financial Resources For Sustainable Development

Linhas de Financiamento Meio Ambiente BNDES Florestal Energias Renováveis Projetos de Transporte Urbano Eficiência Energética (Proesco) Saneamento Ambiental e Recursos Hídricos Projetos Multissetoriais Integrados (PMI) PMAE Ambiental Investimentos Sociais de Empresas Instruments to suport sustainable development Linhas, Programas e Fundos No que diz respeito à disponibilizar recursos para investimentos socioambientais, Linhas, Programas e Fundos são os instrumentos utilizados para a operacionalização da Política Socioambiental do BNDES. Atualmente, o BNDES apóia investimentos socioambientais por meio dos seguintes instrumentos: PROGRAMAS BNDES Compensação Florestal ABC e PRONAF BNDES Procopa Turismo BNDES Proplastico BNDES Saúde BNDES Microcrédito FUNDOS BNDES Funtec e FEP BNDES Fundo Social e Cultural Fundo Amazônia e Fundo Clima FI Empresas Sustentáveis na Amazônia e Inovação em Meio Ambiente

Eficiência Energética A atuação do BNDES no apoio a investimentos socioambientais ocorre de forma setorial e transversal e atende a diversos públicos, iniciativa privada, governo e sociedade civil: Aspectos SocioAmbientais Transversal Reflorestamento, Conservação e Regularização Florestal Eco-Eficiência Industrial Investimentos Sociais de Empresas e Microcrédito Saneamento e Recursos Hídricos Melhoria de Gestão Construção Sustentável Recuperação de Passivo Ambiental Inovação Produção Sustentável Governo Iniciativa Privada Outras Instituições Projetos Integrados: Infra-Estrutura e Serviços Sociais Básicos Desenvolviment o Institucional Instruments to suport sustainable development

BNDES and Green Development BNDES’ Disbursements to the Green Economy (Amounts in US$ million) US$/R$ = total disbursements: around US$ 80 billion

Created in 2010 – aims to mitigate and reduce greenhouse gas emissions in agriculture Financing for farmers and cooperatives with differentiated conditions US$ 1.9 billion in resources available for the 2011/2012 crop Incentives for techniques that guarantee efficiency in the fields ABC Programme Low Carbon Agriculture Projected reduction of emissions for 2020: Between 130 and 160 million tons of CO2e

Objective of the Fund: to ensure funds to support projects or studies aimed at promoting climate change mitigation and adapting to its effects. Source of Funding Resources 2011 Grants: US$ 18 millions Concessional Loans: US$ 119 millions > Main: Up to 60% share of the Special Participation of Petroleum received by the MMA > Potencial Sources: grants, loans, others. Operationalization: Ministry of Environment and BNDES Examples of Sectors: Renewable Energy Sustainable Production Activities: native wood producion, fruit and fiber $ $ $$ $ $ $ $ Concessional Loans Grants $ $ Brazil´s Climate Fund Ministry of the Environment

I.Management of public forests and protected areas; II.Environmental control, monitoring and surveillance; III.Sustainable forest management; IV.Economic activities developed from the sustainable use of the forest; V.Ecological and economic zoning, land-use planning and land-title regulation; VI.Conservation and the sustainable use of biodiversity and; VII.Recovery of deforested areas. Source Source of resources Amazon Fund Aim: Amazon Biome. Aim: non-reimbursable investments in efforts to prevent, monitor and combat deforestation, and to foster the conservation and sustainable use of forests in the Amazon Biome. Amazon Fundprojects following areas To achieve its objectives, the Amazon Fund supports projects in the following areas Disbursements: R$ 89,3 million

Support to ESCO (Energy Service Companies) in projects that contribute to energy efficiency or substitute fossil fuels by renewable sources Attractive financial conditions Three approved projects in 2011 Reduction of energy consumption (estimative): MWh per year PROESCO Fostering Energy Efficiency

Five Dimensions of Planning Land use planning Regional infrastructure / Social, environmental and cultural development Strengthening local management Professional qualification and labour training Economic development (e.g. supply chain, local productive and innovative arrangements, expansion of the income and labour effect) 3 A new approach to support large projects: focus on systemic implications of the territorial area of influence A broader concept of development Economic, social, environmental and territorial dimensions Extended partnerships and social control Adaptability according to local reality A better allocation of financial resources Systemic planning for development Local Development: an opportunity and a responsibility

Non-reimbursable resources for technical studies and research related to sustainable development Objectives: To support the development of public policies To direct BNDES’ strategic guidelines, priorities and policies Analysis of technologies for treatment and disposal of urban solid wastes in Brazil, Europe, Japan and US (coordinated by the Federal University of Pernambuco) Investigation of the potential effects in the Brazilian industry due to the adoption of low-carbon technologies by developed countries (coordinated by the University of São Paulo from Ribeirão Preto - Fearp/USP) Economic research Examples of studies under development:

BNDES Financial Support for Sanitation Investments Disbursements (US$ million) Net exposure (US$ billion) Legal and administrative framework: Water Supply and Sewage (Federal Law Nº. 11,445/2007) and Solid Waste (Federal Law Nº. 12,305/2010). More than R$ 40 billion in public funds to support investments over the next 4 years Opportunities in Public-Private-Partnerships and Concessions: a large and open market for new (qualified) investorsar Water US$ 2.40 Waste US$ 0.13 Drainage US$ 0.21 Sewage US$ 3.59

17 The support for SMEs Share of MSMEs in total disbursement N° of MSMEs supported in 2011 BNDES Credit Card: -510,000 active cards -2011: R$ 7.6 bi -2012: R$ 11. bi (expected) 85.5% of townships with active operations with BNDES credit card for SMEs Source: BNDES 21,5% 31,8% 35,9 % 41,4% 24,0% 24,8% 15% 20% 25% 30% 35% 40% 45% *2010 *2011up to march 2012

Strengthen the integrated approach (considering the economic, social and environmental dimensions of sustainability) in lending and investing Foster investments and partnerships that contribute to the transition to a low-carbon economy and to poverty alleviation Establish a systematic process of monitoring and evaluating the progress on the implementation of the “Social and Enviromental Responsibility Policy” Challenges ahead Foster and accelerate the development of a new economy that recognizes the intangible value of the environment and biodiversity Strengthen partnerships for sustainability in the national and international financial sector Widen stakeholder engagement Foster corporate transparency related to social and environmental issues

The Role of BNDES in fostering sustainable development June 2012