Company: BCDRF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0000891478-25-000054
Chunk: 85

Company: Banco Santander, S.A.
Filing Date: 2025-02-28
Form: 20-F
Chunk 85
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 mortgages (in the UK and Spain), commercial real estate (in the UK and Spain) and agriculture (in Brazil). The selection of sector portfolios for this exercise considered their materiality both at Group and country level within the sectorial climate approach.

The objective of these portfolio assessments is to understand the level of financed emissions in each case, identify levers to drive alignment and understand their feasibility.

The exercise comprised baseline-financed emissions calculations; expected trajectory towards 2030; internal and external alignment levers analysis (considering supply and demand, the regulatory framework and support for sector alignment); internal governance to monitor each portfolio’s alignment progress; and identification of commercial opportunities and initiatives to improve data quality to help align the customers of these portfolios. Further details on the Spain and UK mortgage, and Brazil agriculture exercises are provided below.

Agriculture

The agribusiness sector accounts for over 25% of Brazil’s GDP (Gross Domestic Product). Measuring the sector's financed emissions is challenging. Agriculture comprises a complex and extensive value chain, with varying sources, types and quantities of GHG emissions. Moreover, agriculture practices and emissions vary depending on the commodity, management techniques, geographic location, high portfolios turnover (for instance only 5% of our 2022 portfolio remained active in 2023) and other factors. Our measurement focuses on emissions from primary production activities in the agribusiness sector within Santander Brasil's retail portfolio. The emissions from primary production are unique to the agricultural sector, being under its direct management, and represent a significant portion of the GHG emissions in the agribusiness value chain. Our initial assessment covered scope 1 and 2 emissions originating from farm-gate activities and the land use change (LUC) associated with farmland. Guidelines for setting net zero targets in the agricultural sector are still under development. To overcome the lack of methodology, Santander Brasil, in collaboration with WayCarbon, estimated its financed emissions based on the project finance asset class category from the PCAF, the GHG Protocol Agriculture Guideline, and Brazil’s Fourth National Inventory.

Santander Brasil’s on-balance credit exposure to farms with primary production was EUR 3.58 bn in December 2023. We estimated financed emissions from that portfolio amount to 9.83 mtCO 2 e/year: c.80% estimated for land management, c.20% for LUC emissions (considering 20-year legacy), and less than 1% for energy consumption. The PCAF quality score is 3.1