BBVA S.A. - Portugal Branch
BBVA Seguros, S.A. - Portugal Branch
Article 3 – Transparency of policies related to sustainability risks
BBVA is aware of the important role banks play in the transition to a more sustainable planet through financial activity. For this reason, BBVA adhered to the Principles of Responsible Banking promoted by the United Nations, the Katowice climate package and the Collective Commitment to Climate Action. Likewise, it is willing to play a major role in line with the demands of society and to help its customers in the transition to a sustainable future. In addition, the Bank will ensure that its activity is developed in accordance with a set of values, principles, criteria, and attitudes aimed at creating sustained value for shareholders, employees, customers and society in general.
Likewise, BBVA will promote the creation and implementation of ethical principles based on integrity and transparency.
BBVA considers ESG (Environmental, Social and Governance) factors in its investment decisions. As part of its commitment, it has taken steps to integrate non-financial criteria in its investment decisions, in its support and in the processes of risk control and analysis. To this end, it performs an ESG assessment on the different assets in which it invests, through the discretionary portfolio management service and investment advisory services, in order to determine their sustainability quality and incorporates the entity's own criteria together with information from suppliers and/or specialist analysts.
Should BBVA delegate discretionary portfolio management contracts to BBVA ASSET MANAGEMENT S.G.I.I.C., S.A. (BBVA AM), the risk integration policy will be that of the latter. For more information, click here.
Article 4 - Transparency of negative impacts in sustainability matters at the bank level
BBVA considers ESG (Environmental, Social and Governance) factors both in its investment decisions and when providing investment advice. As a consequence, among other aspects, it takes into account both the impact of sustainability risks on investments made through the discretionary portfolio management service and on the selection of assets for which it provides investment advice, as well as the main negative impacts that these assets may have on ESG factors.
When making investment decisions on the assets that make up the portfolios under its management and when selecting the assets for which it provides investment advice, BBVA takes into account widely accepted international standards, principles and treaties on sustainable development and corporate social responsibility, including:
- The United Nations Global Compact and Sustainable Development Goals
- The Paris Climate Agreement
- Related EU agreements
- The code of good governance of the Spanish National Securities Market Commission (CNMV)
Additionally, BBVA adhered to the Principles of Responsible Banking promoted by the United Nations, the Katowice climate package and the Collective Commitment to Climate Action.
The bank considers risks and ESG factors when selecting and monitoring the assets on which investment decisions will be made or when deciding whether to provide investment advice. It is formalized through the respective action tables of the different investment committees, using both the bank's own criteria and information from suppliers and specialist analysts as a reference. You can find more information about BBVA's Engagement Policy here.
Regarding BBVA's discretionary portfolio management activity carried out in Portugal, while it did not delegate it to BBVA Asset Management Gestión, S.A., S.G.I.C. (BBVA AM), it does receive support from BBVA AM in defining investment profiles and strategies.
Regarding the control and analysis of the main negative impacts that its investment decisions have on sustainability factors, BBVA AM identifies the main impacts according to the nature of the assets in which it invests, defining the variables that it considers most relevant when measuring and monitoring.
Pending approval by the European legislature of the technical standards relating to Article 4 of Regulation (EU) 2019/2088 that define these types of variables, BBVA - Portugal Branch has adopted the indicator selected by BBVA AM, which is the average carbon intensity (scope 1 and 2) for investments in privately issued securities (debt securities) and investment funds.
Article 5 – Remuneration
Among BBVA's remuneration policies, the Bank has a remuneration policy that applies, in general, to all its employees and to the member companies of the BBVA Group (which includes the remuneration policy applicable to the categories of personnel with significant impact on the “Collective Group” risk profile) and a remuneration policy applicable to the Directors of Banco Bilbao Vizcaya Argentaria, S.A. (the "Remuneration Policy for BBVA's Directors").
When defining the policies, in addition to the necessary compliance with the legal requirements applicable to credit institutions and the different sectors in which BBVA operates, it gave consideration to alignment with best market practices, including those aimed at reducing exposure to excessive risk and adjusting compensation to the Group's objectives, values, and long-term interests.
In 2021, on the proposal of the Remuneration Committee, the Board of Directors approved a new Remuneration Policy for BBVA's Directors, which, in turn, will be submitted to the approval of the next Annual General Shareholders' Meeting of 2021 for application in 2021, 2022, and 2023.
One of the fundamental elements of the new Remuneration Policy for BBVA Directors is to reinforce alignment with the Group's strategy and create long-term value. To this end, it establishes the correct balance between the fixed and variable remuneration components, elements that ensure prudent risk management, value creation, a sustainable and resilient business model, as well as greater solvency and profitability. When creating this Policy, the Board of Directors and the Remuneration Committee considered, among other factors, the growing importance that risks related to sustainability and climate change have for the Bank and for society in general. To this end, and in line with BBVA's Strategic Plan, which sets forth sustainability as one of its strategic priorities, the Board of Directors is making an effort to incorporate sustainability and the fight against climate change in the Group's day-to-day business and activities, establishing objectives that facilitate their execution and supervision and monitor their evolution.
Thus, within the scope of the remuneration policy, a new indicator related to Sustainability (Mobilization of sustainable financing) was added for 2021. It is directly linked to the Group's efforts to comply with the commitments made to the market as regards climate change, whereby it has been given sufficient weight to reinforce the President's and Chief Executive Officer's commitment for BBVA to achieve its sustainable development goals in line with the Bank's strategic priority of helping clients in the transition to a sustainable future. For this purpose, it incorporates an ESG (Environment, Social and Governance) metric in the variable remuneration scheme for executive directors, as well as senior management and other bank employees.
Article 6 - Pre-Contractual Information
Portfolio Management and Investment Advisory Services
- How BBVA accounts for sustainability risks in investment decisions When selecting the assets that make up the model portfolios and/or the set of instruments on which recommendations can be given as part of these services, BBVA takes into account environmental, social and good governance risks (known as “ESG” risks) based on internal evaluation criteria. These assessments consider relevant information published by the issuing companies and/or managers of the Collective Investment Schemes in which the portfolios invest, as well as the assessments of said risks by external suppliers.
- Assessment of the impact of sustainability risks on the profitability of financial products. Sustainability risk: the assets in which the portfolios invest and/or on which recommendations can be given are exposed to non-financial risks. Among these, there are environmental, social and governance risks. These variables can have a negative impact on the valuation of said assets and, therefore, on the investment's return. This impact may stem from the influence of these non-financial variables on the economic activity in which these assets invest or from negative perception by the markets.
You can find more information on sustainability at BBVA.com.
ESG Responsible Investment - Integrating sustainability risks into the investment decision-making process
The Management of BBVA SEGUROS S.A. DE SEGUROS Y REASEGUROS (BBVA Seguros), for the first time in 2020, approved the Responsible Investment Policy in perfect harmony with the BBVA Group, for which sustainability is a strategic priority and is based on two key pillars:
- Climate Action: - Energy Efficiency - Circular Economy - Decreased carbon emissions
- Inclusive and sustainable social development: - Facilitating access to financial services to non-banking collectives through basic digital solutions. - Inclusive infrastructure, including basic services and transport systems. - Support for entrepreneurs, promotion of economic growth and full and productive employment.
The Responsible Investment Policy seeks to include non-financial factors in both investment decision-making and sustainable risk management, such as:
(A) Environmental: Associated with potential risks caused by environmental deterioration or climate change.
(S) Social: Related to the company's corporate reputation and its relationship with employees and other stakeholders, as well as the company's stake in society as a whole.
(G) Governance: These include aspects related to correct business management.
At the same time, BBVA Seguros wants to reinforce its commitment to the UN Sustainable Development Goals (SDGs).
BBVA Seguros is a member of the BBVA Group, which seeks to maximize economic, environmental, and social benefits over the long-term and sustainably, demonstrating a firm commitment to the 2030 Agenda and respecting the UN Global Compact and climate neutrality in accordance with the Paris Agreement.
In an effort to give a defined and precise shape to this goal, the Responsible Investment Policy intends to modify the investment process toward sustainability and to establish principles of action when managing investments within this scope, taking into account:
- Traditional aspects of analysis, fundamentally the financial aspects of companies with a view to profitability and risk.
- Environmental, social and corporate governance (ESG) criteria, determining a second level of selection, incorporating extra-financial criteria that, in our opinion, complement the financial analysis, and helping to reduce risks and predictably increase profitability.
- The exercise of active ownership. Active dialogue with companies in an attempt to guide their management toward implementing sustainability policies; and exercising the right to vote at Shareholders' Meetings, by delegating to BBVA.
This is how Socially Responsible Investment (SRI) is materialized at BBVA Seguros and how it allows us to achieve greater efficiency in assessing the risk of the companies in which we invest while, at the same time, improving long-term and sustainable profitability.
Information on negative impacts
BBVA SEGUROS S.A. DE SEGUROS Y REASEGUROS (hereinafter, BBVA Seguros), in its investment management process, will not take into account the negative impacts of investment decisions on sustainability factors because it does not have the necessary methodology to measure such impacts on the assets it invests in. BBVA Seguros is looking at new opportunities in this area in order to incorporate any mechanisms in the medium-term that will allow it to evaluate, measure and control the negative impacts of investment decisions on sustainability factors.
As a member of the BBVA Group, BBVA Seguros strives to promote the development of sustainable solutions in its internal processes as one of its strategic priorities.
Information on Remuneration related to the Integration of Sustainability Risks
BBVA has a remuneration policy that is generally applicable to all its employees, as well as to all companies that are part of the BBVA Group — including BBVA SEGUROS S.A. DE SEGUROS Y REASEGUROS (“BBVA Seguros”) — which includes the remuneration policy applicable to categories of staff with a significant impact on the risk profile.
When defining the policies, in addition to the necessary compliance with the legal requirements applicable to Credit Institutions and the different sectors in which BBVA operates, it gave consideration to alignment with best market practices, including those aimed at reducing exposure to excessive risk and adjusting compensation to the Group's objectives, values, and long-term interests.
Thus, within the scope of the remuneration policy, BBVA Seguros added a new indicator related to Sustainability (Mobilization of sustainable financing) for 2021. It is directly linked to the Group's efforts to comply with the commitments made to the market as regards climate change, whereby it has been given sufficient weight to reinforce said commitments.
You can find more information on sustainability at BBVA.com.