With respect to the timely identification of policy, legal or regulatory changes that may impact the climate transition risk, based on the relevance principle, we have a process structured to identify on a timely basis the changes that impact the Financial System. Nevertheless, we seek to contribute to the discussions on bills in the federal, state and municipal levels and to participate in public consultations on the climate agenda. More specifically, the legislative proposals are monitored, analyzed and, based on the probability of approval and on the analysis of financial and reputational risks, course of actions is developed in the scope of the legislative process. With respect to changes in policies, we identify, capture, analyze, indicate the matter (for example, SAC risks) and report them to target departments to act on regulatory compliance, as well as on monitoring action plans to implementation.
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With respect to the timely identification of political, legal or regulatory changes that may impact the transition climate risk, we have a structured process, based on the relevance principle, to identify in a timely manner any changes that impact the Financial System. Nevertheless, we seek to contribute to the discussions on bills at the federal, state and municipal levels, and notices of public consultations on the climate agenda. More specifically, legislative proposals are monitored, analyzed and, based on the probability of approval and on the analysis of financial and image risks, performance strategies are developed within the scope of the legislative process. With respect to changes in policies, we identify, capture, analyze, indicate the matter (for example, Environmental, Social and Climate Risks) and report them to the departments to act on regulatory compliance, as well as on monitoring action plans to their implementation.
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The Environmental, Social and Climate Responsibility Committee meets at least three times a year and is the main Board level Committee to discuss climate strategy. The Committee is responsible for (i) defining strategies to strengthen the Company's environmental, social and climate responsibility; (ii) monitoring the performance of social institutions related to the Company and the initiatives directly carried out by the Company; (iii) ensuring the appropriate level of autonomy between the institutions that carry out social work and the Company; (iv) promoting the search for synergies and opportunities to increase efficiency between the institutions and the Company and between the institutions themselves; (v) approving the multiannual budget for initiatives that depend on the Company's funding; (vi) monitoring the quality of governance of each institution; (vii) defining the process of allocation of funding via the Rouanet Law and other incentive laws and approving contributions to be made by the Company or other companies of the Itaú Unibanco Conglomerate; (viii) resolving on and proposing recommendations to the Board of Directors on the set-up and review of the Environmental, Social and Climate Responsibility Policy (PRSAC) (either every three (3) years or upon the occurrence of any events deemed significant according to the rules issued by the National Monetary Council); (ix) assessing and keeping a track record of the degree of adherence of any implemented actions to the PRSAC; and (x) monitoring the Company's performance in meeting preset goals and proposing recommendations. The Committee coordinate its activities with the Risk and Capital Management Committee in order to facilitate the exchange of information. As an example of recent discussions, our sectoral decarbonization targets and the governance of our climate strategy were discussed on this Board level Committee, [...] The ESG Wholesale Committee meets every two months and is composed by the CEO of Itaú BBA, the Chief Sustainability Officer, the Chief Risk Officer and other executives directly or indirectly accountable for the climate agenda. The Committee is responsible for approving our sectoral decarbonizatin strategies and action plans, besides supervising our progress on achieving our Positive Impact Commitments, particularly the target to direct BRL 400 billion to positive impact sectors by 2025. The main topics are also submitted to the Superior ESG Council, and, at least bianually the dicussions are also submitted to the Environmental, Social and Climate Responsibility Committee, which is a Board Level Committee. An example was the approval of our net zero target and the sectoral decarbonization targets in 2023, which were discussed at the Board Level after being discussed on both the ESG Wholesale Committee and the Superior ESG Council, besides, the Chief Sustainability Officer (CSO) heads the sustainability and ESG strategy department and works as the institutional Project Management Office (PMO) of the climate strategy, guiding the teams that implement and monitor commitments, at all times in line with institutional guidelines, market trends and technical expertise in climate change and the Chief Risk Officer (CRO) is responsible for the risk structure, also responsible for the unit that operates in the integration of climate risk to the institution's global risk management, being responsible for the Environmental, Social and Climate Risk Policy and the specific Climate Risk Management procedure. Also works as a liaison with regulators, so the report to the board occurs with a frequency superior to every three months.
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The governance of the environmental, social and climate responsibility at Itaú Unibanco has forums and departments indicated below with the following roles and responsibilities, as follows: - **Board of Directors: It approves and reviews the Environmental, Social and Climate Responsibility Policy and ensures** the adherence by the institution to the Policy and the actions aimed at its effectiveness and due corrections, as well as the compatibility with the other Policies established, and ensures that the compensation structure adopted by the institution does not encourage behavior incompatible with PRSAC, with support from the responsible department. - **Environmental, Social and Climate Responsibility Committee: It coordinates the activities with the Risk and Capital** Management Committee (CGRC) and acts on the recommendations to the Board of Directors for the establishment and review of this Policy and, when required, it proposes recommendations for improvement of the actions implemented aimed at ensuring the effectiveness of PRSAC. - **Superior ESG Council: It ensures compliance with Itaú Unibanco's Corporate Sustainability (ESG) Strategy in** accordance with PRSAC, monitors the progress and evolution of main indicators, projects and processes of the Corporate Sustainability (ESG) agenda, both in the retail and wholesale segments, monitoring the bank's work in view of the main ESG demands from the market, regulators and civil society, approving projects and resources necessary for addressing any gaps that may compromise the effectiveness of the Environmental, Social and Climate Responsibility Policy and, when required, it submits proposals for improvement to the Environmental, Social and Climate Responsibility Committee and the Board of Directors. - **Officer in charge: Responsible for managing the Institutional Relations and Sustainability Office, they provide** support and engage in the decision-making process in connection with the establishment and review of PRSAC, assisting the Board of Directors, implement actions aimed at the effectiveness of PRSAC, monitor and evaluate any implemented actions, improve the implemented actions alongside the business and support areas whenever any deficiencies are identified, carry out a proper and reliable disclosure of PRSAC-related information, and are responsible for notifying the Central Bank of Brazil in the case the officer assigned to these responsibilities is replaced. - **Institutional Relations and Sustainability Office: It is responsible for implementing and updating this Policy, as well** as for developing and coordinating topics and processes related to environmental, social and climate responsibility, in accordance with the responsibilities determined in specific internal rules and in line with the business and support areas. - **Environmental and Social Legal Department: It provides support on specific legal topics and guidance on** applicable legislation and rules. - **Risk Department: It identifies, assesses, measures, controls, monitors and reports, as well as internalizes the** Environmental, Social and Climate Risks for Traditional Risks in the Policies and procedures. - **Operational Risk Office: Inserted in the second line, with a Dedicated Operational Risk role, it ensures the** independent performance and integrity of the Internal Control Systems, being responsible for: i) supporting the first line in the management of operational risks; ii) developing and making available the methodologies, tools, systems, infrastructure and governance required to support the integrated management of Operational Risk and Internal Controls; iii) coordinating any Operational Risk and Internal Control activities alongside the Business and Support areas, being independent in the exercise of their functions, and iv) communicating risk notes concerning moderate and high risks. - **Products and Services Departments (Wholesale and Retail): They work on the development of opportunities with** the potential to make a positive contribution to society, nature, climate, environmental restoration and conservation, as well as on providing transparent information to the market. - **Procurement Department: It continuously monitors suppliers with respect to environmental and social criteria and** it may, should material facts be identified, suspend new contracts and ultimately terminate the existing ones at any time. - **Investor Relations Department: It publishes information to investors in accordance with the guidelines of this Policy** and provides the documents listed by CMN Resolution No. 4,945/21 on the institution's website. - **Compensation Department: It ensures that the compensation structure adopted by the institution does not** encourage behaviors incompatible with this Policy. - **Endomarketing Department: It works on the dissemination of this Policy to employees and their engagement** accordingly. - **Internal Audit: It checks, on an independent and regular basis, the adequacy of processes and procedures for** adherence to the Environmental, Social and Climate Responsibility Policy, in accordance with the guidelines established in the Internal Audit Policy. - **Other departments of Itaú Unibanco: They monitor the adherence to the principles and guidelines of this Policy in** the activities under their responsibility and management. They formalize, in their processes, Policies, procedures and/or manuals, the criteria that ensure adherence to the principles and guidelines of this Policy.
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In 2018, we instituted a Climate Finance Squad, hosted in the Sustainability area - with a multidisciplinary nature formed by the areas of sustainability, corporate Environmental and Social environmental and social risk, finance, investor relations and specific areas for each project - in which we developed indicators and tools for implementing and monitoring the recommendations of the Task-Force on Climate-related Financial Disclosures (TCFD), to strengthen the assessment and disclosure of risks and opportunities. The squad activities are divided into two large blocks: the first of Risk Governance, led by the Corporate Environmental and Social Risk area, and the second one consisting of Opportunities, led by the Sustainability area. This structure has allowed us to maintain a dynamic interaction with other areas of the institution and to speed up the engagement processes, the development of technologies and the structuring of the climate agenda. Our decision-making layers follow the levels and responsibilities below: **SENIOR MANAGEMENT** **DECISION MAKING AND SUPERVISION** **EXECUTION AND IMPLEMENTATION** **POLICIES AND PROCEDURES** **Chief Risk Officer** Executive responsible for the topic, communicate to the Executive Committee and Board of Directors **Sustainability and Environmental and Social Responsibility Policies** Climate Risk Management Procedure **Environmental and Social Risk Committee** (Compliance, Credit Risk and Legal) Responsible for decision making on climate risks **Transnational Environmental and Social Risk** Performs climate risk management in line with environmental and social risk management **Positive Impact Committee** (Sustainability and Investor Relations) Responsible for PMO Squad, climate opportunities and commitment to implement TCFD **Climate Finance Squad** (Sustainability, Transnational Environmental and Social Risk, Sureties and Investor Relations) Manages the implementation of the TCFD recommendations, Governance and Risks, led by the Corporate Environmental and Social Risk area, and Opportunities
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**I. Internal governance**
The implementation of the ESG analysis of invested companies is the responsibility of the dedicated ESG unit, and is shared with all fund managers and sector analysts, who are responsible for knowing the ESG risks pointed out in these analyses and considering them in their investment decisions.
The ESG unit is independent from active management strategies, and is part of the organizational structure for index fund management. Head of Indexed & ESG reports directly to Itaú Asset's CIO and CEO.
The responsibility for overseeing Stewardship, ESG integration, votes at meetings of investee companies, and engagements lies with our CIO and CEO. We reassess our ESG plans and goals annually. [...] **Reporting and information control:**
We report on our activities and developments in the areas of sustainability in investments and stewardshipthrough periodic public reports, such as AMEC's Stewardship Report and Itaú Unibanco's Integrated Annual Report. Information control is carried out by Itaú Asset's ESG Unit, under the supervision of the Compliance and Audit departments, as per activities defined in Itau Asset Management's internal policy and procedure.
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###### Government relations[(1)]\n\nOur representation of our institutional\ninterests and the interests of the financial\nsystem has developed by means of the\nmonitoring of the regulatory process, as\nwell as the provision of information and\ntechnical suggestions aimed at contrib\nuting to the improvement of the Brazilian\nregulatory environment, always observ\ning relevant legal and ethical precepts.\n\nWe seek to work in direct contact with\ncivil society, academia and third sector\nentities for the purpose of cooperating\nwith the development of public policies\nthat converge with the interests of\nsociety and of the organization. With\nrespect to the strengthening of institu\ntional causes, we made, over the course\nof the year, financial contributions to\nsupport projects and activities that\ncontributed to the development of the\npublic sector.\n\nWorking with public bodies, in accor\ndance with the issues that involve our\nbusiness and the causes we support,\nensures democracy and respect for\nBrazilian laws. The principles set forth by\nour Code of Ethics and our Government\nRelations Policy guide the permitted and\nexpected conduct of our employees in\ncases of relations with public agents.\n\nWe step up efforts at the federal, state\nand municipal levels. At the federal\nlevel, we monitor the legislative pro\nposals being discussed in the National\nCongress on topics that involve the\nfinancial sector, such as issues concern\ning tax, consumers, labor and regula\ntions of new technologies.\n\n.\n\n###### Legislative proposals at the\n federal level (approximate number\n of proposals)\n\n3,200\n3,000\n2,800\n\n2017 2018 2019\n\nMeetings with representatives\nof the Executive and Legislative\nBranches, with the involvement of\nother representative entities, to\ndiscuss the proposals on the Positive\nRegister File, which provides for the\ncentralization and availability of\nconsumer data in order to optimize\nthe offer of credit to the population,\nwith emphasis on Supplementary\nBill No. 441, of 2017, passed into\nSupplementary Law No. 166 of April\n8, 2019.\n\n|2,800|Col2|Col3|\n|---|---|---|\n\n(1) We keep in contact with government entities in order to contribute to the development of public policies that converge with the interests of the organization and\n\nsociety. Our work with public bodies is based on the principles of ethics, transparency, morality and legality, ensuring democracy and respect for Brazilian laws\nand the principles established by our Code of Ethics.
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**7.2. OFF-THE-SHELF ESG TRANSACTIONS** For off-the-shelf ESG transactions involving individuals or companies:
**1.** **Framework and creation of the ESG Rationale: analysis and structuring of the transaction** according to the purpose intended and to the methodologies and parameters adopted in the sustainable finance market, as stated in chapter 3 hereof. Adaptations are also carried out to some wholesale basic products, such as rural product notes, rural loans, working capital, and loans under the scope of Law No. 4,131/1962, with the inclusion of features such as monitoring, management of consequences and adjustments to drafts required to ensure compliance with the ESG framework. **2.** **Approval in the Governance of ESG Rationale: approval in the governance established for** the creation of the ESG Rationale, with joint assessment for the purpose of follow-up and good standing of the rationale, based on the opinions of the Sustainability, Environmental, Social and Climate Risk, and ESG Legal departments.
**3.** **Transactions entered into: transactions are prospected and entered into by following the** standard process for financial products already in place at Itaú BBA. For ESG agribusiness products, additional environmental, social and climate risk criteria may be required depending on the specific ESG topic of the credit line.
**4.** **Formalization and Monitoring: Obligations associated with the transactions are controlled** and submitted to the approved consequence management in the case of non-compliance. Metrics approved by the ESG Rationale Governance are reported.
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The governance of the liquidity risk management is based on advisory boards, subordinated to the Board of Directors or the executive structure of Itaú Unibanco. Such boards establish the institution's risk appetites, define the limits related to the liquidity control and monitor the liquidity indicators. The control of the liquidity risk is carried out by an area that is independent of the business areas, responsible for defining the composition of the reserve, estimating the cash flow and the exposure to liquidity risk in different time horizons and monitoring short and long term liquidity indicators (LCR and NSFR respectively). In addition, it proposes minimum limits to absorb losses in stress scenarios for each country where Itaú Unibanco operates and reports any non-compliance to the competent authorities. All activities are subject to verification by the independent validation, internal controls and audit departments. [...] The Program establishes a frequent flow of acculturation with the company's senior management, as well as a constant analysis of high-impact scenarios and events to establish response plans in line with current threats.
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Describe the process(es) your organization has in place to ensure that your engagement activities are consistent with your overall climate change strategy[…]We have worked since 2018 on the transition to a lowcarbon economy, including by defining policies, action plans and measuring our performance in the face of the challenges of climate change. We have already offset 100% of our scopes 1 and 2 emissions. In October 2021, we announced our commitment to reducing our scopes 1, 2 and 3 emissions by 50% by 2030 and becoming a Net Zero Carbon bank by 2050. We have set out an initial plan to achieve these targets based on actions to reduce and remove emissions, within setting timeframes and tracking technological trends. This plan will be reviewed annually to incorporate advances in the climate theme, staying in line with science at all times. We are signatories to the Net Zero Bank Commitment, which is a specific commitment for the banking industry created by the United Nations (UNEP FI) calling for signatories to have loan portfolios with net zero emissions by 2050. Driven by the global climate change emergency, local and foreign movements have gained momentum and increased pressure on the private sector. Accordingly, we are committed to reducing our emissions by 50% by 2030 and becoming a Net Zero bank by 2050. This target of becoming Net Zero by 2050 has been based on the best science available. According to the IPCC special report on 1.5°C, to keep the global temperature rise at 1.5°C by the end of the century, it will be necessary to reach "Net Zero†, that is, a point where CO2 emissions equal removals, by 2050. To do this, emissions must be reduced by at least 45% by 2030. This topic has been discussed and incorporated into new prudential regulations for the financial sector, reflecting the recognition that climate change represents a threat to global financial stability. Therefore, our plan involves activities to reduce and remove GHG emissions, taking into consideration the current level of technology in each sector, as well as the projected evolution of our clients and their engagement in terms of setting their targets. In addition to the recently announced target of R$400 billion of investment in positive impact sectors. In September 2021, the BACEN also released resolutions related to Environmental and Social Risk that determine integrated governance, formalization, management, monitoring, and clear reporting environmental, social and climate risks.
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CDP Questionnaire Response 2022
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Does your organization have a public commitment or position statement to conduct your engagement activities in line with the goals of the Paris Agreement?[…]Yes
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CDP Questionnaire Response 2023
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