Bancop SME Financing Partnership

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Project Number: 
Expected Consideration Date by the Board: 
Date Posted: 
Banco para la Comercialización y la Producción S.A. (“Bancop”)
Financing Requested: 
Up to PYG55 billion (approximately US$10 million)
Financial Markets
Environmental and Social Category: 
Scope Objective: 

The proposed operation contemplates a senior loan of up to 55 billion Guaraníes (“PYG”), which will be financed by IDB Invest. The Loan will have a term of up to five years, with a grace period of up to two years, and quarterly amortization. The use of funds will be to finance small and medium enterprises (“SMEs”) in the productive sector of Paraguay.

Environmental Review: 
  1. Project Description This Project aims to expand Bancop’s on-lending activities in the productive sector of Paraguay.
  2. Environmental and Social Categorization and Rationale This operation is classified as an FI‑2 under the IIC’s Sustainability Policy. Based upon the nature of this transaction (i.e. a partnership to provide medium term funding to SMEs in the productive sectors), there are likely to be moderate to significant indirect environmental, social or health and safety (“ESHS”) and labor impacts and risks. Bancop’s portfolio is concentrated in agriculture (46.2%) and livestock (12.7%), which present risks in the form of deforestation and land-use change, particularly in the Paraguayan Chaco (“Chaco”).
  3. Environmental and Social Risks and Impacts Sub-project environmental and social risks may be related to occupational health and safety, supply chains, deforestation, land-use change, and pesticide / chemical use. Bancop will be required to manage these risks through the application of an Environmental and Social Management System (“ESMS”) with particular attention given to operations in the Chaco or where deforestation is of heightened risk. Bancop will be required to apply the Exclusion List, National Laws, Good Practice Guides in the context of Agriculture, Livestock, and Agro-Industry on-lending, and use a satellite monitoring program for agriculture and livestock on-lending. These activities have been defined in a detailed action plan that Bancop has previously agreed with other Development Finance Institutions (“DFIs”) lenders. Bancop will be required to report annually, and provide monitoring reports of client activity and possible deforestation.
  4. Mitigation Measures/E&S Action Plan



Adherence to the elements of the internal Action Plan agreed upon and approved by the Bancop's Board of Directors.

IDB Invest will incorporate the activities and deadlines into the Action Plan previously agreed upon and approved by the Bancop’s Board of Directors. Bancop will provide similar interim updates as with all other DFI lenders. The Action Plan will be incorporated into IDB Invest’s contract.

Board Approval ESMS development project.

Bancop’s Board of Directors will define and approve an ESMS development and implementation plan.

Adopt and implement the Cattle Ranching, Agriculture, and Agro-Industry Guides

Incorporate the requirements as defined within the respective guides. Bancop will adopt the Sectoral Guides according to the Action Plan approved by the Board.

Adopt satellite monitoring software for purposes of analyzing and monitoring sub-project performance.

Commit to having mapped all clients in accordance with the requirements and time schedule defined in the guides. Ensure site location is mapped within the Global Forest Watch Finance application (when available). Provide reports of mapped clients in order to illustrate portfolio activity.

Membership within the Mesa de Finanzas Sostenibles.

Participation in the Mesa de Finanzas Sostenibles and actively contribute to its operation and wider engagement with other stakeholders.