1. Emerging Actors in
Development Finance
A CLOSER LOOK AT BRAZIL’S GROWTH, INFLUENCE AND THE ROLE OF BNDES

2. Topics
Introduction
The Changing Global Landscape
Brazil Takes Off
BNDES Promotes Brazil, Inc.
BNDES Safeguards and Laws
A More Detailed Look at BNDES
WRI’s Work & Influence Strategy

3. Introduction
South-South financial
flows are changing the
nature of development
finance and assistance.
Between 2009 and 2010,
two Chinese state-owned
banks lent more money to
other developing countries
than the World Bank.[1]
During the recent financial
crisis, Brazil invested $10
billion in International
Monetary Fund bonds, a
striking example of the
country’s transformation
from a debtor to creditor.[2]
Expanding South-South trade and investment provides welcome and needed sources of
capital for countries in Africa, Asia, and Latin America. At the same time, these financial flows
– coupled with the emergence of powerful financial actors from China, India, Brazil, and other
economies – may pose new challenges for environmental and social sustainability.

4. Introduction
Why Focus on Brazil’s National Development Bank (BNDES)?
• Financial engine behind the country’s domestic boom
• Pivotal role in Brazil’s growing international economic presence
• Key player in South-South focused development
• BNDES Mission: “To foster sustainable and competitive development in
the Brazilian economy, generating employment while reducing social and
regional inequalities .”

5. Topics
Introduction
The Changing Global Landscape
Brazil Takes Off
BNDES Promotes Brazil, Inc.
BNDES Safeguards and Laws
A More Detailed Look at BNDES
WRI’s Work & Influence Strategy

6. A New Geography of Growth
Projected shifts in Country
Rankings by GDP (PPP), 2010‐2020
Relative shifts in economic power and political
influence are reconfiguring the global context for
sustainable development policy. We are
currently witnessing what the OECD terms “the
new geography of growth” – “a 20-year
structural transformation of the global economy
in which the world’s economic centre of gravity
has moved towards the East and South.”
Trends indicate that developing economies will
“account for 57% of world GDP by 2030.” [3]
Despite sharp differences among members, the
G-20 is supplanting the G-8 as the primary
vehicle for global economic policy
coordination.[4] Large emerging market
economies are defining their own approaches to
development cooperation, governance issues,
and environmental and social sustainability
outside of many existing normative frameworks.
Source: Euromonitor International

7. Expanding South-
South Trade
South-South trade is clearly a
dynamic force in the global
economy. While world trade
expanded four-fold between
1990-2008, South-South trade
grew more than ten times.
Developing countries now
account for around 37% of
global trade, with South-South
flows making up about half of
that total (19% of global trade).[5]
In 2009, for example, China
surpassed the US as Africa’s
largest trading partner. [6] Sino-
Africa trade volumes exceeded
166 billion US dollars in 2011. [7]

8. Topics
Introduction
The Changing Global Landscape
Brazil Takes Off
BNDES Promotes Brazil, Inc.
BNDES Safeguards and Laws
A More Detailed Look at BNDES
WRI’s Work & Influence Strategy

9. Brazil Takes Off
2001: 2007 & 2010: Brazil adopted
Growth Acceleration
Per Capita GDP: US$ 3,133[1] Programs (PACs), major
FDI Inflows: US$ 22,500 multiannual stimulus
billion[2] packages to accelerate
economic growth, reduce
poverty, and counter the
global economic recession.
2011: President Rousseff
2011:
launched Plano Brasil Maior,
her administration’s growth-
Per Capita GDP: US$ 11,600
oriented industry, technology
FDI Inflows: US$ 66,700
and foreign trade policy
billion[3]

10. Brazil Becomes an International Player
Brazil Outward FDI (US$ billion)
35
30
28.38
25
20 20
15
10.81 11.6
10 9.8
5
2.3 2.5 2.5
0 0.2 -1
-2.2
-5
-10 -10
-15

11. Major Drivers of Brazil’s Foreign Policy
• Regional integration enables Brazil to reach new markets, expand exports,
incorporate the Amazon into Brazil’s productive space, and increase its
regional influence.
• IIRSA Initiative (Initiative for Integration of Regional Infrastructure in South
America, 2000-2010): joint program of South American governments to
promote integration through the modernization of transportation, energy
and telecommunication infrastructure.
• Financial Institutions, including BNDES, CAF, FONPLATA, BANDES, KfW,
JBIC, EIB, IFC, IDB, Caribbean Development Bank, and private financial
institutions support IIRSA projects.
• Transnational corporations played a critical role in this initiative,
facilitated by governments through supportive policies, laws,
agreements and low interest loans from public financial institutions
• UNASUR and COSIPLAN (South-American Council on Planning and
Infrastructure): , responsible for making the selection of high-impact
infrastructure projects for South-America’s integration and development.

12. Topics
Introduction
The Changing Global
Landscape
Brazil Takes Off
BNDES Promotes Brazil, Inc.
BNDES Safeguards and Laws
A More Detailed Look at
BNDES
WRI’s Work & Influence
Strategy

13. State-Owned Banks: Money for Growth
Main State-Owned Financial Institutions in Brazil
Multiple functions. Focus
on urban infrastructure,
housing and sanitation Development of the
Amazon region and
reducing inequalities
National Development Bank
Development of the Northeast
Multiple functions. Focus on
rural credit, agri-business, region and reducing inequalities
foreign commerce

14. BNDES Promotes Brazil, Inc.
Total lending comparison of public financial
institutions 2011 (US$ billions)
Source: 2011 Annual Reports

15. BNDES Promotes Brazil Inc.
BNDES Volume of Loans Over Time (R$ billion)
Source: BNDES Annual Report 2011

16. BNDES Promotes Brazil, Inc.
Distribution of Loans into Sectors in BNDES Total Disbursement in 2011:
2011 (%) R$ 139.7 billion
1 Infrastructure 6%
7 Industry Big Enterprises
20%
21 40 Trade & Services Medium Enterprises
Agriculture Small and Micro
10% 64% Enterprises
31
Others (including Persons
environment)
Source: BNDES Annual Report 2011

17. BNDES Promotes Brazil, Inc.
Examples of BNDES offshore financing
Venezuela: Hydroelectric, Metro, Steel BNDES backs Brazilian
Industry
Colombia:
Urban Transport Guyana: Road, Port, Hydroelectric companies that participate in
Transmillenium Suriname: Port international public biddings for
Ecuador: infrastructure projects.
Hydroelectric
Peru: In 2003 BNDES created a
Hydroelectrics,
Roads specific credit line for the
Bolivia: Roads internationalization of Brazilian
Paraguay: companies. The goal is that they
Transmission
Uruguay: Lines contribute to the social and
Chile: Thermoelectric, economic development of Brazil
Metro Expansion, Gas Line
Transantiago Argentina: by reaching new markets,
Hydroelectrics, learning new technologies and
Gasoducts,
Mining promoting Brazil.
Source: Lissardy, Gerardo, “BNDES impulsiona maior presença brasileira na América Latina”, BBC Brasil, November 9, 2011

18. Scale of Brazil’s Growing Investments
in Africa
• Main Interest: Market Brazil – Africa Trade (in US$ billion)
expansion. Oil, minerals,
construction, agribusiness,
biofuels.
• Africa is Brazil’s 4th largest
trading partner (behind
China, Argentina, USA)
• Trade with Africa in 2010:
USD 20 billion
• The bulk of Brazil’s
investment in Africa has been
financed by BNDES and
carried out by national
champions or state
enterprises
• Construction: Odebrecht,
Camargo Correa, Andrade
Gutierrez , Queiroz Galvão
• Oil and Mining: Petrobras
and Vale
Source: Ministry of Trade and Development website. Available at:
http://www.mdic.gov.br/sitio/interna/interna.php?area=S&menu=2477&refr=576

19. Source: “Bridging the Atlantic” Report, World Bank. December 2011.
Available at:
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/0,
,contentMDK:23061951~pagePK:146736~piPK:226340~theSitePK:258644,
00.html
BNDES Promotes Brazil, Inc.

20. Topics
Introduction
The Changing Global Landscape
Brazil Takes Off
BNDES Promotes Brazil, Inc.
BNDES Safeguards and Laws
A More Detailed Look at BNDES
WRI’s Work & Influence Strategy

21. BNDES Environmental and Social Policies
1976: Partnership with Special Secretary for the Environment (old Ministry of Environment) and adoption of
checklist for environmental and labor legislation as a policy for socio-environmental assessment
1989: first Environmental Unit created in BNDES (develop knowledge, provide technical support for
operational areas, propose programs and credit lines). Environmental requirements start to be applied
1994: BNDES signs UNEP-FI’s letter of Principles on Sustainable Development for Banks
1995: BNDES signs Green Protocol
1996: BNDES Resolution 874: BNDES will only finance projects that obey environmental and labor
legislation and are energy efficient
1999: BNDES adopts environmental policy signaling that credit risk is directly proportional to risk of damage
to be caused by a project
2003: Environmental Guides for a systematic environmental analysis of projects during framing, analysis,
risk assessment and monitoring (Environmental Unit inoperable between 2003-2004)
2006: New Environmental Policy
2008: Green Protocol revised
2009: Environmental Area to report directly to the Board of Directors (analyzes operational, credit and
investment activities)
2010: There are two policies: “Social and Environmental Corporate Responsibility” and “Socioenvironmental
Policy”. The socioenvironmental policy applies to the entire BNDES system replacing previous
environmental policy.

22. BNDES Sector Guidelines
• Currently, BNDES is preparing environmental and social guidelines –
detailed studies of all social and environmental implications and
considerations of a specific project type
• It remains to be seen whether these guidelines address all implications
• These guidelines form the basis of the policies BNDES will apply to its
entire direct investment portfolio
• Provide comprehensive information relevant to the sector in the
Brazilian context
• The following three sector guidelines have been published
• Meat-packing
• Sugar and ethanol
• Energy generation from fossil fuels
• More in the pipeline or not disclosed: solid waste; water and sewage,
biomass thermopower; hydropower; coal; silviculture
• Future sector policies to be drafted after approval of corresponding
guidelines

23. The Green Protocol
The Brazilian financial system started its actions in support of sustainability through
the Green Protocol, signed by public banks in 1995 (revised in 2008).
Principles
1) Offer credit lines and programs that support life quality of the population and the
sustainable use of natural resources;
2) Consider socioenvironmental costs and impacts on the risk analysis of projects; (ie:
safeguards);
3) Promote the rational use of natural resources and its products on internal processes;
4) Continually inform and engage stakeholders on sustainable policies and practices;
5) Promote cooperation and integration of efforts between the Protocol signatory institutions
What BNDES did for each
1) Developed financing lines and programs for social and environmental investment projects.
2) New Operational Policy that determines that the environmental risk of projects should be
included on the calculation of the total project risk, which happens at the framing phase.
3) Energy, water and office supplies consumption reduction; recycled paper; internal
sustainable consumption policy.
4) Environmental analysis preparatory course for new employees.
5) Meetings with the Ministry of Environment, the Central Bank and the Federation of Banks
(Febraban) to set a series of sustainable practices, criteria and operations.

24. BNDES Environmental Screening
The FRAMING AND CREDIT COMMITTEE
FRAMING approves the project and sends back to client with
recommendations. Chooses the Operation Area.
Dept. of Priorities & Credit Area
• The Loan Requester fills out a Questionnaire ANALYSIS
that includes business location and Selected Operation Area
characteristics; environmental visions and - Assesses the project’s main
practices of Company; Environmental License environmental and social impacts,
status; Existence of Environmental applies the sectoral guidelines
Debentures. - Structures project and formulates the
• Credit Area classifies the Project according to conditionings.
the Environmental Risk in:
A(high): dams, hydro and thermoelectric;
roads,…
B (presents risk): recuperation/modernization
of existing infrastructure The Board of Directors
approves the Operation Area’s
C (no risk)
Analysis Report
APPROVAL/CONTRACT
Projects outside of Brazil now undergo • Upon compliance to tax, labor, social and
an environmental screening, observing environmental laws
• Installation License required
the specificities of the sector and of the • Conduct Adjustment Term
host country’s legislation. • Meeting of all conditionings

25. Brazil has a solid environmental
legislation framework
Constitutional Provisions: Right to ecologically balanced environment. Federal, state and
municipal levels of government can define environmental standards and grant environmental
permits.
National Environment Policy: Defines polluter as responsible directly or indirectly for causing
environmental harm. Requires environmental licenses for activities that use natural resources and
may cause environmental degradation.
Environmental Information Law: Access to public documents on environmental quality, programs
impact, and results from environmental monitoring. Public authorities may require private entities to
provide information on potential environmental impacts of their activities.
National Policy on Climate Change: Addresses emissions, deforestation, energy. Funded in part
by Amazon Fund, managed by BNDES.
Environmental Licensing Law: Requires Environmental Impact Assessment and Environmental
Impact Report for the issue of licenses. 3 stage licensing process: preliminary license (approving
location/design), installation license (authorizes installation according to environmental mitigation
measures) and operation license (confirms previous requirements were met).
Brazil also has Access to Information Law, Environmental Crimes Law, and is a member of
OAS, and a party of ILO Conventions, the Washington Convention on the Settlement of
Investment Disputes, GATs and TRIMs Agreements, etc.

26. BNDES Monitoring of Compliance
with Environmental Requirements
The Bank uses different mechanisms to monitor the project’s compliance to
environmental clauses and conditionings in the contract:
1) Company’s duty to be accountable on their environmental performance to
BNDES
2) On-site visits
The Bank acknowledges that there is significant room for improvement especially on
the monitoring phase.
The fact that not all sectoral policies are ready does not impede the Bank to - on the
project analysis phase - draft specific demands for the project in order to avoid
environmental and social problems.
In addition, in 2003 BNDES created an ombudsman to channel complaints and
suggestions from third parties. However, 2010 data indicates a response to only
11.3% of the total messages received.

27. Example of Stakeholders’ Concerns
High impact projects financed by BNDES (e.g. Jirau and Santo Antonio, and Belo Monte
dams, numerous others in the past) and questions over the effectiveness of development
finance have raised concerns among many civil society organizations and networks.
Example: Plataforma BNDES coalition
• Network of civil society organizations created in 2007
• Complains BNDES socio-environmental policies are being drafted without civil society
consultation, existing policies are ineffective because of insufficient control and
monitoring from the Bank, and BNDES lacks transparency and participation.
• Specific demands1
1. Information on potential environmental risks of Bank projects; project framework
for each line of financing; project approval criteria; risk assessment methodology;
companies and projects that benefit from BNDES investment outside Brazil.
2. Adoption of social and environmental criteria in the loan analysis and approval
process with participation of civil society representatives; rigorous monitoring on
compliance.
3. Development of policy to remedy social and environmental liabilities of
BNDES- financed projects
4. Rigorous application of social clauses in BNDES financed projects
5. Increased lending for micro and small businesses
6. Pro-active role for BNDES in financing investments that diversify Brazil's energy
matrix and its production structure

28. Topics
Introduction
The Changing Global Landscape
Brazil Takes Off
BNDES Promotes Brazil, Inc.
BNDES Safeguards and Laws
A More Detailed Look at BNDES
WRI’s Work & Influence Strategy

29. BNDES within the Structure of the
Brazilian Government
Brazilian Federation
Legislative Executive Judiciary
Ministry of Development,
Industry and Foreign Other Ministries
Trade
BNDES

30. Overview of the BNDES System
FINEM
Internationalization of
companies; capital goods
(projects > R$10 million)
BNDES Automatic
Expansion, modernization
of companies
Direct financing (projects < R$ 20 million)
BNDES Indirect financing
Administrative Mixed financing
Council BNDES Card
International operations
Exim Brasil through pre shipping and
post shipping
Project Finance
Subsidiary that helps with
BNDES System BNDES Ltd. London internationalization of
Brazilian companies
Indirect finance of
FINAME acquisition of machines
and equipment
Board of Directors
Investment arm through
BNDESpar private equities, venture
capital and debentures

31. Overview of the BNDES System
Funding Sources
Funds for
Workers’ Federal Treasury environmental and
Fund (FAT) (L11948 and sustainable projects
12249)
Direct financing Amazon
BNDES BNDES Indirect financing Fund
(International) Others Mixed financing
Operations BNDES
Technology Fund
International operations
Exim Brasil through pre-shipping
(FUNTEC)
and post-shipping
BNDES Mata
Subsidiary that helps Atlantica
Ministry of
with
Development, Industry BNDES System BNDES Ltd. London
internationalization of
and Commerce Vale Florestar
Brazilian companies
Fund
Indirect finance of
FINAME acquisition of machines Caixa Ambiental
and equipment Fund
Organs BNDES is accountable to
Investment arm through Climate Fund
National Court National BNDESpar private equities, venture (Fundo Brasil
of Audit Monetary capital and debentures Sustentabilidade)
(congress) Council
ECOO11
National
Central Bank Comptroller’s
31
Office

32. BNDES Non-Reimbursable Funding
Forests and Sustainable
Protected Areas in Activities in the
the Amazon Amazon
Amazon Fund
Institutional
Scientific and
Development and
Technology
Improving Control
Development
Mechanisms
BNDES Mata Forests and Protected
Areas in the Mata
Atlantica
Atlantica biome
New
Energy Environment Health
BNDES Technology Materials
Fund (FUNTEC)
Petroleum
Chemistry Transport
and Gas
32

33. BNDES Participation in Private Equity Funds
Climate Fund Alternative Energy
Desertification Urban Mobility
(Fundo Brasil 50% Energy Efficiency
Sustentabilidade)
Solid Waste
Caixa Ambiental Sanitation Clean Energy Biofuel
Fund
17% Treatment
Deforested land in
Vale Florestar Fund
20% Carajas region
ETF administered by BNDES with shares that can be acquired by
ECOO11 companies that publish their CO2 emissions. The ICO2 index will show
the companies that are more efficient in the CO2 emission and their
ECOO11 revenue, and these companies will have a bigger share in the fund.
33
33

34. Who is who: focus on environmental and
social divisions Director: Guilherme
Narciso de Lacerda
Agriculture, Cattle- Environmental Division
Social Infrastructure
Raising and Social
Division SERGIO WEGUELIN
Inclusion Division
• Drafts the sectoral guidelines
• Environmental evaluation, analysis and monitoring of projects Dept. of Environmental
Policies and Studies
• Institutional training on environmental policies and corporate
environmental governance MARCIO COSTA
Dept. of Environmental
PROESCO, Reforestation, BNDES Forest Compensation, Carbon Operations
Credits Securitization and other environmental operations OTAVIO VIANNA LEÃO
Amazon Fund
Legal Dept.

35. Decision Making for Infrastructure Projects
The Government, through one of its Ministries, defines a project whose
implementation will be transferred to the Private Sector.
A Company is hired to structure the project, assessing the technical,
environmental, legal and economic feasibility.
Different project models are developed and presented for approval to
the Ministry of Planning and the Ministry of Treasury.
EIA reports give way to public consultation with stakeholders and the
issuance of 3 sequential environmental licenses. Then, the National
Court of Audit (legislative power) approves the project.
A public bidding takes place. The winning company and the Government
sign a contract.

36. Topics
Introduction
The Changing Global Landscape
Brazil Takes Off
BNDES Promotes Brazil, Inc.
BNDES Safeguards and Laws
A More Detailed Look at BNDES
WRI’s Work & Influence Strategy

37. WRI’s Work
WRI’s work on emerging actors in
development finance is led by the
International Financial Flows and the
Environment objective. The goal of this
research is to improve the environmental,
social, and climate change policies that
govern emerging actors’ investments, and
to ensure that local communities and civil
society organizations impacted by the
investments are able to engage with
“emerging actors” more effectively. This
preliminary research focuses on Chinese
and Brazilian overseas investments and
begins to look at the growth drivers and
geographic trends of those investments.

38. A WRI Influence Strategy
Three-linked Influence Strategy
Engage policymakers to develop
environmental and social guidelines to
Investor govern overseas investments.
Country Engage companies and financial institutions
(China & to develop and implement environmental
Inform and social risk management policies. Create
Brazil) enabling
decision-
makers of Strategy Build the capacity of local civil society conditions
potential organizations to create demand for stronger for local
environme environmental and social guidelines. communiti
ntal and Enhancing the roles of emerging actors in es to raise
social Internationa international and bilateral investment concerns
impacts on l Strategy standards setting directly
the ground with
Host Work with host country governments and decision-
local civil society organizations to facilitate makers
Country stronger environmental and social
Strategy performance among foreign companies

39. Thank You
Information in this PowerPoint is drawn from a forthcoming WRI scoping
paper on emerging actors in development finance.
For more information or questions, contact
Athena Ballesteros
Director
International Financial Flows and Environment Project
World Resources Institute
aballesteros@wri.org
Roland Widmer
Senior Associate
International Financial Flows and Environment Project
World Resources Institute
rwidmer@wri.org
Photo Credits (flickr creative commons license): “Construction-Equipment” by Ken Trout; “Reflexo” by
Janos Graber; “Ventura” by Mirtes Ho; “Sao Paulo” by J Felipe; “Africa Tanzania Ngorongoro Crater” by
Stephen McClung; “Forest Crystal Ball” by Chuck Rogers; “Rainforest” by Dominik Hofer