Case study: How BBVA uses Asset Impact data to drive climate goals

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BBVA is one of the largest financial institution in the world, with over 160 years of history operating in more than 25 countries where it provides services to more than 80 million customers. Bringing together more than 110,000 professionals working in multidisciplinary and diverse teams, BBVA is ahead of the transformation that is taking place in the banking sector, challenging the status quo, to make life easier for its customers.

Business type: Bank

Product: Advanced company indicators, PACTA dataset

Region(s) of operation: Global

From assessment to impact: An unprecedented commitment to global climate goals

Asset Impact’s data has been integral to BBVA’s commitment to achieve net-zero emissions. BBVA has been closely collaborating with Asset Impact (formerly Asset Resolution) since its very inception. Notably, BBVA was among the original signatories of the Katowice Commitment, alongside BNP Paribas, ING, Société Générale, and Standard Chartered. During COP24, BBVA and the other Katowice Banks jointly made a first-of-its-kind commitment to scale and expedite the transition toward a climate-resilient world and meet the objectives of the Paris Agreement. On BBVA’s side, this involved assessing the climate alignment of its lending portfolio and exploring strategies to gradually redirect financial flows within its core lending operations to align with the objectives of the Paris Agreement.

"BBVA's collaboration with Asset Impact has been instrumental in driving our commitment to global climate goals since the very beginning. As a signatory of the Katowice Commitment and a pioneer in introducing the Paris Agreement Capital Transition Assessment (PACTA), we recognized the immense potential of asset-based data and proactively engaged with Asset Impact to expand our access and capabilities,” said Gerardo Echave Pita, Sustainability Risk Manager at BBVA.

PACTA, which runs on data provided by Asset Impact, serves as a free, open-source scenario analysis tool for financial institutions and regulators, enabling them to evaluate the alignment of their financial portfolios and the companies they invest in with climate goals. In 2020, after piloting PACTA, BBVA took the important step of subscribing to Asset Impact’s products, kickstarting the process of integrating asset-based data into its internal systems.

“We have successfully integrated Asset Impact data into our internal systems, streamlining our processes. This valuable data has allowed us to construct powerful tools, such as our internal tool for portfolio alignment and computing financed issues, as well as a data visualization dashboard. These innovations empower our analysts and stakeholders with deep insights into our portfolio and a clear understanding of the implications of our actions," continued Echave Pita.

Harnessing the power of Asset Impact data to drive sector plans and investment strategies

Initially, BBVA employed Asset Impact data primarily to calculate alignment within the PACTA methodology. However, since 2019, BBVA’s use case for the data has significantly broadened. Leveraging an internal system powered by Asset Impact data, BBVA has been able compute to its financed emissions in accordance with the PCAF framework, as well as set sector plans and investment strategies for the medium term.

“The integration of Asset Impact's data has been instrumental in driving our climate objectives and advancements across BBVA's portfolio. The accurate and reliable asset-based dataset provided by Asset Impact has allowed us to develop sector plans, set investment strategies, and track progress towards our global targets. With the insights gained from this data, we have successfully reduced emissions, aligned our portfolio with climate goals, and made significant strides towards contributing to a net-zero world," said Echave Pita.

Asset Impact’s data is of utmost importance in BBVA's target-setting efforts and across its varied voluntary and mandatory reporting requirements, both at a global level and on a customer-specific basis. For example, the global targets, disclosed in BBVA's annual TCFD report, encompass various dimensions such as the bank's governance model, strategy, risk management, and climate change metrics.

In its 2022 TCFD report, BBVA shared detailed information about sector plans for which alignment targets have been set. These sectors include oil and gas, power generation, automotive industry, steel and cement, as well as phase-out targets such as coal mining. With Asset Impact's data, which provides a comprehensive coverage of 95-100% for the analyzed sectors, BBVA's latest TCFD report revealed significant progress toward its climate targets. Across its portfolio, BBVA successfully reduced emissions by 4% in the power generation sector and 4.8% in the automobile manufacturing sector between 2020 and 2022. Furthermore, the cement sector and steel sector witnessed a decline in emission intensity by 1.4% and 10.2% respectively during the same period. BBVA has also made a resolute commitment to eliminate its exposure to coal clients in developed countries by 2030 and globally by 2040.

Engaging with clients on decarbonization

To effectively pursue its targets, BBVA leverages Asset Impact data to monitor the decarbonization strategies of its existing clients and screen potential new clients. The data serves as a foundation for selecting operational Key Performance Indicators (KPIs) that enable BBVA bankers and analysts to track progress across the portfolio and assess prospective additions. These indicators provide a comprehensive and tailored view of each client, playing an important role in due diligence processes for new deals.

According to Mr. Echave Pita, "The information we obtain from Asset Impact is essential to understand our customers' progress in decarbonization, as well as to be able to focus our business on those customers with better performance or to establish engagement with those customers who have a worse performance in terms of emissions and efficiency."

In addition to the KPIs, BBVA considers a client's transition plans, examining how they intend to transition their technologies or adjust their business practices to enhance sustainability in the future. BBVA evaluates how these decarbonization plans align with the bank's overall targets, ensuring compatibility and shared commitment to sustainable practices.

BBVA actively collaborates with Asset Impact to ensure continued progress by engaging in regular communication and providing valuable feedback. By sharing its insights and needs, BBVA has played a crucial role in shaping the evolution of Asset Impact's product, such as the expansion to new sectors and development of new indicators like Asset Impact’s emissions separated by scope. This collaborative partnership has empowered Asset Impact to adapt and refine its offerings for BBVA, and ensure they align with the evolving demands of banks and asset managers in their collective endeavor to achieve a net-zero world.

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