When requesting credit lines, BNDES may define social and environmental indicators that will be used to monitor and evaluate the client and the project, as well as social and/or environmental conditions identified from the analysis of the project in addition to requirements already provided by law.
The contract may also establish clauses aiming for the client/beneficiary company to take all the measures within its possibilities to prevent its administrators/directors of the company or its subsidiaries; employees, agents or representatives, as well as suppliers of essential products or services for the project/operation to be executed, from being involved in corruption, bribery, laundering or concealment of goods, terrorism or terrorist financing, or acts that result in a crime against the environment, racial or gender discrimination, child labor or slave-like labor, or that characterize as moral or sexual harassment.
Socio-environmental clauses
The Social Clause included in all financing contracts may determine the suspension or early maturity of the transaction, requiring immediate settlement of the outstanding debt, if the company practices acts that result in discrimination based on race or gender, child or slave-like labor, or that characterize as moral or sexual harassment.
Other common contractual clauses are related to labor and social security obligations, protection of rights for people with disabilities and the requirement to offer training programs for job opportunities in the region the company operates and/or a program to relocate workers to other companies of the group (if the supported project results in the need to reduce staff).
BNDES also requires measures to be adopted for to prevent or correct damage caused to the environment, promote improvements in occupational safety and health conditions that may arise from the project, and maintain operational compliance standards with the competent authorities, as well as clauses on the company’s accountability for any environmental damages that may be caused.
In post-shipment export operations, BNDES may include socio-environmental conditions in addition to those provided by applicable legislation in the country of destination of Brazilian exports.
Monitoring of the requirements
All obligations, indicators, socio-environmental requirements, and conditions contractually established by BNDES are monitored throughout the project’s execution and during the financing term.
The following items are verified:
- fiscal, social security and environmental regularity status for the beneficiary and the project;
- compliance with any mitigating measures, obligations in terms of conduct and conditions adjustments established in the contract and in the environmental licenses;
- monitoring of socio-environmental indicators and assessment on the beneficiary and the project, if defined so in the contract
- presentation of the Operating License of the supported project, as applicable.
Another instrument used to prevent non-compliance with socio-environmental legislation is the Ombudsman channel. Through it any person can report a project’s non-compliance with legislation so that BNDES may investigate the claim and apply the measures provided for in regulations and the relevant contracts.
Last update: August 4, 2021