ANNUAL REPORT 2015 THE BRAZILIAN DEVELOPMENT BANK Understand how BNDES works and the results it delivers to society. PERFORMANCE R$ 135.9 billion were disbursed in 954,208 operations with 221,114 clients. Learn about the main activities of infrastructure, social and production inclusion, and in support of the competitiveness of Brazilian companies. INTERNAL ENVIRONMENT Learn more about governance, transparency, relationships, financial sustainability and developing competence at BNDES. ANNUAL REPORT 2015 CONTENTS 4 5 6 12 EDITORIAL BRAZIL AND THE THE BRAZILIAN HOW DOES WORLD IN 2015 DEVELOPMENT BANK FINANCIAL SUPPORT WORK? REGIONAL AND TERRITORIAL DIMENSION INNOVATION 30 36 SOCIAL AND 44 ENVIRONMENTAL BNDES AND SOCIETY STRATEGY AND RESPONSIBILITY INFRASTRUCTURE: VISION FOR A DECISIVE SECTOR THE FUTURE 17 22 26 28 BNDES IN GOVERNANCE, FINANCIAL DEVELOPING NUMBERS CONTROL AND SUSTAINABILITY COMPETENCE MANAGEMENT PRACTICES 49 54 56 58 COMPETITIVENESS SOCIAL AND GLOSSARY/ CREDITS/TELEPHONE OF BRAZILIAN PRODUCTION GRI INDICATOR NUMBERS AND COMPANIES INCLUSION CHART ADDRESSES EDITORIAL This report presents the highlights of our elaboration of a methodology to define PDF version, available on our digital library performance in 2015, focusing on economic, materialities, which is expected to be (www.bndes.gov.br/bibliotecadigital). social and environmental aspects. Starting formalized in 2016. The IR is an international The report ranges from January to out from our capitals – financial, human, initiative aimed at improving the quality December 2015 and comprises the entire intellectual, social and relationship- of corporate reports in an effort towards BNDES System, which includes the Bank’s based, natural and manufactured – and greater transparency and stability in seven facilities – Brasília (Federal District), Rio the prospects that comprise our 2015 the worldwide economic system. de Janeiro (Rio de Janeiro state), São Paulo strategic map, we present our main In this perspective, this report features (São Paulo state), Recife (Pernambuco state), fields of activity in the past year. reorganized sections and the presentation Belém (Pará state), Montevideo (Uruguay) Once again published in a magazine of new information, such as an overview of and Johannesburg (South Africa) – as well format, this edition seeks to reach – in the Brazilian and world context and the as the subsidiaries: BNDES Participações S.A. a simple and direct way – all audiences identification of our capitals. (BNDESPAR), operating in the capitals interested in our activities and serve Throughout the report, readers are market; the Special Agency for Industrial as gateway for those seeking to know referred to additional contents in other Financing (FINAME), dedicated to fostering how BNDES creates value for society. sections of the report or on our website, the production and commercialization of This material results from progress and also to the glossary, whenever a technical machinery and equipment; and BNDES PLC, in adopting the Integrated Report (IR) or specific term is used. The 2015 report whose main purpose is to the support the principles, as the review of the reporting continues to use the Global Reporting insertion of Brazilian companies abroad, process carried out in 2015, and the Initiative (GRI) indicators and has also a located in London (United Kingdom). Learn more about the Integrated Report on http://www.theiirc.org. ICONS USED Term explained in the glossary IN THIS REPORT GRI indicator 4 As a result of rounding up, the sum of the numbers 2015 in the charts might not be exact; similarly, the sum of the percentages in the charts may not total 100. For the same reason, there may be a small variation between the values presented in the report. ANNUAL REPORT BNDES ANNUAL REPORT BRAZIL AND THE WORLD IN 2015 The year 2015 was marked by the recurrence to a low carbon economy, such as the growth in Brazil. Prominent in this of the previous year’s macroeconomic Paris agreement during the 21st UN context is the support to investment in scenario and the persisting sluggish growth Conference on Climate Change (COP21). the energy and logistics sectors, which of the world’s major economies, resulting involve capital-intensive projects. in the continuing economic slowdown BNDES in 2015 of international trade. The deterioration The economic and political difficulties faced of Chinese activity indicators negatively by Brazil influenced our performance, impacted commodity prices, and the increasing the cost of loans and reducing expected rise of the base interest rate of the disbursement of resources. The year the United States of America increased was also marked by a growing questioning volatility in emerging markets such as of our work by society and control agencies, Brazil. Internally, the crisis was intensified culminating in the establishment of a by the impact of the fall in commodity Parliamentary Commission of Inquiry (CPI) prices and reduced public spending in an by the Brazilian House of Representatives. already stagnated economy. The weak Aware of the demands of society and economic activity of 2014 deteriorated control bodies, we have increased our in 2015, and business and consumer efforts of accountability and transparency. Learn more in the confidence levels remained at historic In June 2015, for example, we reformulated section “BNDES and society”. lows. In addition, the adjustment of our transparency website on the Internet. relative prices put pressure on inflation Access was facilitated and information (high inflation of administered prices and on operations – which had been already depreciation of the R$/US$ exchange rate). featuring objectives, borrowers and loan All these factors led to the loss of Brazil’s values since 2008 – was expanded with investment grade, in December 2015, the inclusion of key financial conditions by the rating agencies Standard & Poors (terms, rates and guarantees). and Fitch Ratings. Thus, the profitability In 2015, we also sought to internalize of companies remained below historical the highest international standards in average levels, and the risk of investing sustainability and environment, related in stocks increased due to the uncertainty to both the analysis of investment of the macroeconomic scenario. projects and the practices to be However, in the face of other challenges, implemented by companies in Brazil. such as those related to climate change, To this end, we endeavored to match 2015 also marked the beginning of the the standards of the best similar financial quest for a new framework of economic institutions and thus to improve our growth both in Brazil and worldwide. methodology for the systemic analysis 5 The nations agreed on new commitments, of projects, involving also the stages of such as adopting the agenda of Sustainable follow-up and effectiveness of projects. 2015 Development Goals (SDGs) of the United Finally, we maintained our focus on Nations (UN), to be implemented by expanding investment in infrastructure 2030, and formulated plans to transition in order to drive the recovery of economic ANNUAL REPORT BNDES ANNUAL REPORT THE BRAZILIAN DEVELOPMENT BANK In this section, learn more about BNDES, WHO ARE WE? WHO ARE OUR our activities and how we operate. MAIN AUDIENCES? We have been operating since 1952 and WHAT IS A we are now one of the major development We interact with many audiences, from DEVELOPMENT BANK? banks in the world. As the main instrument the abovementioned government agencies to implement the Federal Government’s up to every Brazilian citizen, comprising Development banks are public institutions investment policy, our mission is to suppliers of goods, services and financeable that emerged in the 1940s, during foster the sustainable and competitive items, clients, financial agents, opinion worldwide postwar reconstruction development of the Brazilian economy, leaders, institutional partners, the efforts. Since then, they have played a generating employment and reducing academic community, among others. significant role in the socioeconomic social and regional inequalities. To this In 2015, the BNDES Relationship development of the countries and regions end, we support various segments of the Policy System was approved. This policy where they operate, in accordance economy and businesses of all sizes. stemmed from extensive work to identify with their different stages, whether the our key partners and audiences. Besides scenario is one of stability or crisis. listing and describing them, the policy Each institution has its own way of HOW DO WE RELATE provides values and guidelines to govern operating, but similarly all of them invest TO OTHER LEVELS OF our relationship with each one of them. intellectual, human, social and financial GOVERNMENT? capital – the latter generally employing public sources – to help implement policies, We are a federal publicly-owned company complement loans provided by the private linked to the Ministry of Development, financial sector, and prompt the private and Industry and Foreign Trade.* Our efforts See also the section public sectors to take risks and challenges are established by the Advisory Board, “BNDES and society”. concerning long-term strategic investments. the Auditing Committee and the Fiscal Over the recent decades, growing attention Council, and we report to several levels of has been paid by these institutions to government: the Ministry of Finance, the the integration of economic, social and Central Bank, the Office of the