Environmental guidelines and safeguards

Our Corporation ensures that, in all credit operations we finance, adequate and timely management of environmental and social risks is carried out, which includes: a preliminary classification of the operation's risk level, according to the type of operation and environmental sensitivity; due diligence that verifies compliance with the requirements established in the Environmental and Social Safeguards (SAS) and, as a result, the design of an Action Plan with the required mitigation measures.

The Coordination of Environmental and Social Evaluation and Monitoring develops these actions while the Environmental, Social, and Climate Risk Unit supports the process results with its verification. This management of environmental and social risks in credit operations is examined, among other matters, during the credit evaluation process by the Credit and Investments Committee, whose direction is at the C level, which among other powers has the authority to make decisions on high-risk operations. Thus, we promote the highest standards in environmental and social management.

CAF ensures compliance with the current environmental and social regulatory framework in the country where the projects are developed, in accordance with what is established in the SAS. In this regard, a technical-administrative process for the management of environmental and social risks (RAS) has been developed and implemented throughout all stages of the credit process of operations, which includes:

1. Origination: the preliminary evaluation of the most relevant RAS and the categorization of the operation based on its risk level.
2. Evaluation: due diligence to identify, evaluate, and propose mitigation measures for the identified environmental and social risks.
3. Formalization: ensuring that the Action Plan with the approved environmental and social conditions for the operation is adequately included in the legal documentation.
4. Administration: close, permanent, and timely monitoring of the environmental and social management of operations during their validity.

The RAS management process incorporates various specialized methodologies and tools that allow:

• Verifying that the operations to be financed are aligned with ethical, environmental, social, and governance principles to ensure the proper use of funds provided by CAF.
• Categorizing the environmental, social, and climate risk level of operations.
• Activating the corresponding SAS for each project.
• Designing and implementing an Action Plan with the required mitigation measures, according to the operation's risk level.
• Continuously monitoring the performance of the RAS and adjusting action plans throughout the project's life cycle.
• Evaluating the financial exposure of the operations portfolio to physical risks derived from climate change.