ESG Products

Financing of Positive Impact Industries

We are committed to contributing R$400 billion by 2025, in the form of business initiatives that promote a sustainable and increasingly green and inclusive economy. In our classification of “positive impact”, considering the concepts being discussed by the European Union, the Climate Bonds Initiative, the United Nations (UN), the International Capital Market Association (ICMA), and the Brazilian Federation of Banks (Febraban) and we elected six major industries of positive impact for financing:

▪ renewable energy: energy generation from cleaner sources, such as solar, wind, and small hydroelectric plants, which contribute to reducing the negative impact on the environment and society;
▪ energy services: initiatives that reduce the cost of access to energy, making this basic service more accessible throughout Brazil;
▪ health and education: hospitals and laboratories that promote quality of life improvement, and educational institutions that aim at the qualification and employability of the population;
▪ infrastructure works: projects that increase economic development through rail transportation, sanitation, and solid waste;
▪ pulp and paper: projects that contribute to climate mitigation, based on responsible management;
▪ agribusiness: initiatives that promote the preservation of forest areas and best practices, and investment in productivity, guaranteeing the availability of food, supporting the maintenance of biodiversity, the preservation of water resources, and carbon inventory.

ESG debt securities in the capital market in the local market

Itaú BBA has been standing out in structuring ESG debt securities issues in local capital markets following International Capital Market Association (ICMA) guidelines and best market practices, which includes transactions with a green, social, sustainable, transition seal, or with features linked to sustainability goals (ESG-Linked). The offers in which Itaú was involved included a diversified range of fixed-income products that have been ESG-labeled. These included, but not limited to, Certificates of Agribusiness Receivables (CRA), Real Estate Receivables Certificates (CRI), Promissory Notes (NP), Debentures supported by Federal Law 12431/11, simple Debentures, and Receivables Investment Funds (FIDC). (*) ESG-labeled offerings in which Itaú participated, relied on specialized consultants for Second Party-opinion (SPO).

ESG debt securities in the capital markets, foreign market

Itaú BBA has been standing out in structuring ESG debt securities issues in foreign capital markets following International Capital Market Association (ICMA) guidelines and best market practices, which includes transactions with a green, social, sustainable, transition seal, or with features linked to sustainability goals (ESG-Linked). (*) ESG-labeled offerings in which Itaú participated, relied on specialized consultants for Second Party-opinion (SPO).

Funding of ESG holders in the capital markets

Proprietary issuances (green, social or sustainable) in which the funds raised must be used to finance or refinance eligible green and/or social investments in our credit portfolio, as described in our Sustainability Finance Framework.

BBA ESG Advisory

We have a team dedicated to advising clients and originating ESG transactions at Itaú BBA. We understand that, especially in emerging markets such as Brazil and other countries where the Bank operates, it is necessary to have the commitment not only of clients but also of financial institutions so that the additionality of ESG transactions is materialized and can be enjoyed by all stakeholders. We have adopted a stance of not charging our clients (in terms of service rendered) for our ESG advice, so that this motivates our clients and recurring issuers to anticipate the trend of integrating ESG into their business model and thus be able to contribute to the global challenge of achieving the United Nations Agenda 2030 targets.

Green Entrepreneur Plan

The Green Business Plan is an initiative of Itaú BBA in Brazil, in partnership with the International Finance Corporation (IFC), a member of the World Bank Group, which provides technical solutions to adapt businesses of construction companies and real estate developers clients to more sustainable construction processes. The objective of the initiative is to stimulate the provision of funding of more sustainable more sustainable real estate, office, or residential projects under special conditions—which may include better interest rates. Currently, the certificates accepted and integrated into the Green Business Plan are: EDGE Certification (Excellence in Design for Greater Efficiencies); AQUA Certification (High Environmental Quality); LEED (Leadership in Energy and Environmental Design);

Green Onlending

Verde Onlending are Itaú’s sustainable mortgage loans targeting individuals. The program’s goal is to offer a special interest rate at the time the loan is raised in for those who buy apartments in buildings with sustainable certifications from the developments that were financed by the Green Business Plan. The Green Onlending benefit is applied to purchase transactions financed by individuals, offered at the time the real estate unit is transferred to the final buyer.

Legal Reserve +

Itaú BBA has carried out rural credit transactions and rural producer certificates (CPR)—at special interest rates for farmers who have a preserved native vegetation area larger than the required area under the Forestry Code and who undertake not to deforest their own properties during the effectiveness period of the transaction. This is the ‘legal reserve +’ product, created to encourage the preservation of standing forest, even if the change in land use is permitted by law. To verify eligibility for the benefit and the monitoring throughout the transaction are done by remote sensing and satellite imaging. The monitoring also aims at ensuring that the funds are not used to deforest new areas in other regions.

Reverte Program

In mid-2021, we made our first disbursement within the partnership with the Reverte Program, which is an initiative of Syngenta and TNC (The Nature Conservancy), for the purpose of promoting, technically and financially, the conversion of degraded pasture areas into arable areas in the Brazilian Cerrado. In addition to increasing productivity, this movement enables the expansion of agricultural production areas without the need to deforest new areas. The farmers who join the program comply with social and environmental criteria monitored by TNC and receive technical guidance and technological solutions provided by Syngenta and other partners for the implementation of the project to recover and convert degraded areas in those. Itaú BBA is a partner of the Reverte program by providing exclusive financial solutions tailored to the needs of the rural producer for project implementation.

Credit Transactions with ESG criteria

Itaú BBA operates in the structuring of several ESG-Linked credit transactions (onshore and offshore), following the guidelines of the Loan Market Association (LMA) and best market practices, which includes operations with a green, social, sustainable, transition seal or with characteristics linked to sustainability goals. The loan transactions contracted with Itaú Unibanco can be structured in a variety of financial products, such as, but not limited to, working capital, drawn risk, foreign currency products such as Export Credit Notes (NCEs), Export Prepayments (PPEs), and loans (Loan 4131). These products follow their specific regulation with the complement of ESG requirements, criteria and guidelines.

Recommended ESG Portfolio

To offer a recommendation for investors with different profiles who are interested in linking ESG criteria to their investments, we have created the ESG-recommended portfolio, which highlights products that offer exposure to assets with the best environmental, social and management practices for businesses. The portfolio is composed of managers who are pioneers in Brazil in integrating ESG principles into their investment philosophy and process, by way of certificates, bonds and shares of companies that recognize and adopt ESG practices, and by indices that offer exposure to industries, businesses or assets that are relevant to ESG. To encourage adhesion to the ESG portfolio, we also publish the monthly ESG letter to encourage managers and issuers to make affordable products available to more people.

ETF ISUS11 – Itaú Asset Management

ETF ISUS11 Variable-income fund with share traded on the stock exchange, tracks the performance of B3’s Corporate Sustainability Index (ISE).

ETF GOVE11 – Itaú Asset Management

Variable-income fund with shares traded on a stock exchange, tracks the performance of B3’s Corporate Governance Trade Index (IGCT).

Carteira Itaú ESG Internacional Fund – Itaú Asset Management

A diversified allocation fund with a significant improvement in the ESG performance of the invested assets. Derived from the success of the Itaú Portfolio Fund, the fund offers a complete portfolio, with investments in Brazil and abroad in equivalent apex funds, but using ESG methodology.

Itaú Index ESG Água Fund – Itaú Asset Management

Fund that seeks to track the performance of the largest global companies whose businesses are water related. With access to 50 companies in more than ten countries, the fund offers an investment topic that is little explored in Brazil and, therefore, with great diversification potential.

Itaú Index ESG Energia Limpa Fund – Itaú Asset Management

Fund that seeks to represent the Clean Energy topic in the world by granting access to more than 30 global companies that produce energy from renewable sources, such as biofuels, solar power, and wind power, while supporting the transition to a more carbon-efficient economic system.

Itaú Ações Momento ESG Fund – Itaú Asset Management

It provides clients with an unrestricted variable-income strategy that pursues absolute long-term returns and avoids investing in companies currently involved in ESG controversies by including Itaú Asset’s ESG filter in the selection of businesses, combining the search for businesses with high business and management quality and the flexibility to explore market opportunities.

Active Fix ESG – Itaú Asset Management

Invests in companies in industries of the economy that generate positive social and environmental externalities in their core business, such as, but not limited to, health, education, sanitation, renewable energy, and low-income housing.

ETF YDRO11– Itaú Asset Management

Itaú Unibanco’s international equity ETF that replicates the S&P Kensho Hydrogen Economy portfolio by tracking the performance of businesses focused on the hydrogen economy, an element with high combustion power and great potential to revolutionize the energy market.

ETF REVE11 (“Green Revenues”) – Itaú Asset Management

By seeking to invest in the most advanced companies in a transition to a green economy, the ETF tracks the portfolio of the Russell 1000 Green Revenues 50 Index by granting access to shares of global companies that have the highest proportion of their profits related to revenue earned from green products and services, according to the European Union’s green taxonomy.

Itaú Ações Globais ESG Fund

The fund invests in global companies with the best ESG performance in their industries (best in class). The fund tracks the MSCI World SRI index, which integrates quantitative and qualitative aspects of ESG-related issues in the company evaluation and selection process. In addition to selecting the companies with the best ESG performance, the index excludes companies that operate in controversial industries or are involved in ESG controversies related to their operations, products, and services (negative filter).

Microcredit

In our microcredit operations, we offer formal and informal microentrepreneurs (up to R$360,000/year in revenue) a line of credit to finance productive activities, in line with the Brazilian productive and targeted microcredit program (PNMPO). We offer more affordable interest rates, contract simplicity, and an exclusive service that seeks to foster financial inclusion and the formation of an ecosystem of small entrepreneurs for the social and economic development of Brazil’s lower-income population. The microcredit loans portfolio are offered throughout the Northeast, in amounts that range from R$400.00 to R$21,000.00. In addition, our product is integrated with iti, a free digital bank. The client receives the loan via the application, after a technical visit in person by the microcredit specialist, and has the possibility to manage the money digitally by having access to other financial features such as payments, transfers, and credit cards.

Credit for Female Entrepreneurs

The credit granted is an important way to support female entrepreneurship. The financial instruments enable business growth by increasing the income of families directly and indirectly linked to the enterprise.

Financing for electric and hybrid vehicles

We offer special interest rates (starting at 1.29% per month) to incentivize the growth of the electricity industry in Brazil. By doing so, we offer our clients benefits that can be an additional incentive for this choice. We have noted a growth in the share of these vehicles in our funding production. In the last two years, the volume of credit granted for financing these categories grew by 267%, compared to 2020. The increase compared to 2021 was 22%. We also make available a purchase club option for electric and hybrid vehicles, with incentives for cash payment, besides all the benefits of a purchase club, such as planning, smaller installments, and no interest rate.

Financing of Solar Panels

For the purpose of making it easier for our clients to invest in the installation of sustainable energy generating units (that provide consumption independence, without the emission of greenhouse gas emissions), we make available financing facilities for solar panels, which contribute to the expansion of renewable energy generation in Brazil’s energy matrix. Through a digital, uncomplicated experience, we will offer financing for photovoltaic projects for account holders and non-accountholders, at special interest rates.