China Construction Bank Brazil - CCB

China Construction Bank (Brazil) Banco Múltiplo S/A Av. Brig. Faria Lima, 4440 · Itaim Bibi · CEP 04538-132 · São Paulo SP · Brazil SAC 0800 701 0224 · Customer Service to the Hearing and Speech impaired 0800 940 0649 · Ombudsman 0800 725 2242 br.ccb.com · Confidential Information · Property of CCB Brazil

China Construction Bank Brazil

April – 2016

Corporate Inventory of Direct and Indirect Emissions

of Greenhouse Gases

Full Version

China Construction Bank (Brasil) Banco Múltiplo S/A Av. Brig. Faria Lima, 4440 · Itaim Bibi · CEP 04538-132 · São Paulo SP · Brasil SAC 0800 701 0224 · Customer Service to the Hearing and Speech impaired 0800 940 0649 · Ombudsman 0800 725 2242 br.ccb.com · Confidential Information · Property of CCB Brasil

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Summary 1. Introduction ..................................................................................................................................................... 3

1.1 Climate Change ....................................................................................................................................... 3

1.2 CCB BRASIL ............................................................................................................................................ 3

1.3 Objective ................................................................................................................................................... 4

1.4. Coverage ................................................................................................................................................. 4

1.5 Report Structure ...................................................................................................................................... 5

2. Premises of the Inventory ............................................................................................................................ 6

3. Methodology ................................................................................................................................................... 7

3.1 Inventory Limits ........................................................................................................................................ 7

3.2 Scopes ...................................................................................................................................................... 8

a) Scope 1: Direct GHG Emissions ......................................................................................................... 8

b) Scope 2: Indirect GHG Emissions associated with Energy ............................................................ 8

c) Scope 3: Indirect GHG Emissions ...................................................................................................... 8

3.3 Identification and quantification of GHG sources ............................................................................... 9

a) Steps for quantification of GHG sources ........................................................................................... 9

b) Methodology for exclusion of GHG sources ..................................................................................... 9

4. Obtained Results ......................................................................................................................................... 10

4.1 Accounted Sources ............................................................................................................................... 10

4.1.1 GHG Direct Emissions .................................................................................................................. 10

4.1.2 GHG Indirect Emissions (Electricity) ........................................................................................... 11

4.1.3 Indirect Emissions .......................................................................................................................... 11

5. Summary of Emission Results................................................................................................................... 13

5.1 Reporting Period .................................................................................................................................... 13

6 Final Remarks ............................................................................................................................................... 17

ANNEX 1 - Technical Team .......................................................................................................................... 19

1. In charge of GHG Quantification ........................................................................................................... 19

2. Technical Team FOCUS TRAINING AND CONSULTING ............................................................... 19

ANNEX 2 - Calculation worksheets ............................................................................................................. 20


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1. Introduction

1.1 Climate Change

Climate Change deriving from the increase in the average temperature of Earth was evidenced by the

IPCC (Intergovernmental Panel on Climate Change) and is generating economic losses to society. This

event distinguishes itself day after day, not only due to studies and scientific forecasts, but mainly by

exacerbated timeless weather reactions in the eyes of most of all. It is altered by the continuous supply of

Greenhouse Gases into the atmosphere due to the growing human activities.

The anthropic action demonstrates that no matter how unnoticed or absorbable the actions of society are

in general, the regulatory balance of terrestrial climatic characteristics is being broken and will result in

consequences for life on this planet. Predictions of droughts, floods, hurricanes, and loss of biodiversity

are already undeniable.

The Paris Agreement, signed by 196 countries in 2015, predicts that the average temperature should be

stabilized with an increase of less than 2°C, due to the efforts that will be given to reduce carbon

emissions in the coming decades.

By maintaining today's current levels of emissions, the temperature rise is expected to exceed 4°C.

Sustainability in all industries is no longer an option: it is a necessity. Laws and regulations are being

created, whilst the private initiative starts to take its steps through volunteerism.

1.2 CCB BRASIL

China Construction Bank – Banco Múltiplo S.A. was constituted in Brazil from the acquisition of

BICBANCO, in August 2014CCB Brasil has then become the biggest operation of a Chinese bank in the

country.

By the end of 2015, it had 33 points of services, with operations mainly centered in loans for working

capital, deposits, credit and trade finance services, derivatives and fixed income investment products.


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With its headquarter in Sao Paulo city, the Organization has other companies in the country, besides

controlling a branch in Grand Cayman, which attends clients' needs overseas. Under this structure, it will

foster even more business opportunities in relation with China – which is Brazil's main commercial

partner.

In its country of origin, CCB is the second biggest bank, and globally, it is the fourth best ranked in valor in

the market. It has been operating for 60 years; it has US$ 2.7 trillion in assets, 350 thousand employees,

14.8 thousand branches and 26 subsidiaries outside of China.

In order to address the trend of the financial market of encompassing issues such as sustainability, CCB

Brasil is now working on this Greenhouse Gases emissions inventory allowing it to create measures to

minimize the effects of its emissions.

1.3 Objective

This document aims to demonstrate the results of the GHG emissions inventory, according to data

informed.

1.4 Coverage

Data provided by CCB, encompassing every property of the bank, was inserted into this report. This

report presents the results of the collected data and calculations of emissions from each source, in which

direct and indirect emissions associated with the consumption of electricity generated by third-parties and

consumed by CCB and indirect sources that are relevant for the consistency of this inventory were

accounted for.

This work's scope entails:

- fuel consumption of owned vehicles;

- electricity consumption prevenient of the distribution grid;

- air travel by employees;

- use of taxi for dislocation of the audit team;


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- Use of motorcycle service for deliveries.

- owned airplane's aviation kerosene consumption;

- consumption of diesel fuel in owned generator.

- reloading of refrigerants in air-conditioners;

- load transportation.

Since it was difficult to obtain data, solid waste data has not been included in the organization's GHG

inventory. This source is characterized as scope 3, and its declaration is not compulsory according to the

GHG Protocol. Since this source is not part of the scope of the inventory since the base year, we opted

for maintaining the scope adopted since the base year.

Minor sources were also excluded due to the difficulty to obtain data, such as fire extinguishers and

electric energy consumption of common areas in condominiums. The calculation of emissions derived

from wastewater treatment depends on a number of estimates for their measurement, which raises the

level of uncertainty of results for this source. Therefore, despite having been reported in previous years,

the organization chose not to report the corresponding emissions again.

1.5 Report Structure

1 – Introduction;

2 - Description of the premises used to guide our team during the undertaking of activities;

3 - Description of applied methodology as well as used terms and of undertaken activities such as: people

and products transportation, electricity consumption, and waste generation;

4 – Presentation of obtained results;

5 – Synthesis and final results.


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2. Premises of the Inventory

The premises to the development of inventories are considered issues of methodological support in order

to decide for a certain approach. The diversity of sources, frequency, and format of available data vary

enormously in any corporate inventory.

Besides being a statistical repertoire to treat data, the premises are general and necessary criteria for the

preparation of inventories.

The premises for this emissions inventory were established according to best practices for services of this

nature, which are:

Relevance: Ensure the GHG inventory appropriately reflects the GHG emissions of the company

and serves the decision-making needs of users.

Completeness: Account for and report on all GHG emission sources and activities within the

chosen inventory boundary. Disclose and justify any specific exclusion.

Consistency: Use consistent methodologies that allow relevant comparisons along time.

Transparently document any changes to the data, inventory boundary, methods, or any other

relevant factors in the time series.

Transparency: Consider all relevant topics coherently and factually, based on a transparent

auditing. Disclose any relevant assumptions and make appropriate references to the accounting

and calculation methodologies, and data sources used.

Accuracy: Ensure that the quantification of GHG emissions is systematically neither over nor

under actual emissions, as far as can be judged, and that uncertainties are reduced as far as

practicable. Achieve sufficient accuracy to enable users to make decisions with reasonable

assurance as to the integrity of the reported information.


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3. Methodology

In this section, we will more thoroughly describe the used terms and undertaken activities in Greenhouse

Gases quantification.

Among the many available protocols and standards to produce such inventories, the following ISO 14064

[ISOa, ISOb], GHG Corporate Protocol [GHGp] of the World Business Council for Sustainable

Development and World Resources Institute, and the Intergovernmental Panel on Climate Change

(IPCC) were used for this work.

The estimates for GHG emissions in this inventory were calculated based on methodologies and emission

factors published by IPCC and used by the Brazil GHG Protocol Program.

Whenever possible, more elaborated methodologies or specific emission factors for the Brazilian context

were used in order to achieve greater accuracy and consistency of the inventory.

The methodologies and emission factors used to estimate GHG emissions of the identified sources in the

Institutions’ activities are described in the Excel worksheets that are part of this report.

3.1 Inventory Limits

The limits of the inventory cover corporate operations and associated services, described as follows:

CCB Brasil Arrendamento Mercantil S.A. | Works with leasing operations for legal persons and in

business with movable and immovable property, particularly vehicles, machinery, and equipment.

CCB Brasil DTVM – Distribuidora de Títulos e Valores Mobiliários | Responsible for operations

with securities.

CCB Brasil Informática S.A. | Data processing services and provides technical support to the

activities of the institution.

CCB Brasil Administradora Cartões Ltda. | Emits and manages credit and prepaid cards.

CCB Brasil S.A. – Crédito, Financiamentos e Investimentos | Specializing in vehicle financing

and payroll loans to individuals in the retail market.


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Scopes qualify the emission factors in direct emissions, direct emissions associated with the consumption

of electricity generated by third-party and consumed by CCB, and finally, indirect emissions.

3.2 Scopes

We considered GHG sources that are considered relevant by the best understanding of the technical

team and by the quantification of the sources. All sources considered relevant are part of the scope of this

service. We used the following definitions:

Scope 1 – Direct GHG emissions from sources that are owned or controlled by the company, such

as emissions from fuel consumption in (owned or controlled) vehicles, and emissions from refrigerating

gases inside operational units.

Scope 2 – Indirect emissions caused by the purchase and use of electric and thermal energy.

Scope 3 – Other indirect GHG emissions. Scope 3 emissions are a consequence of the activities of

the company, but occur from sources that are not owned or controlled by the company, for example,

transporting employees by air travel, load transportation, taxi use, and use of generators in the

condominium of the company's headquarter.

In the case of CCB Brasil, the adherence to scopes was defined as follows:

a) Scope 1: Direct GHG Emissions

Mobile combustion associated with vehicle use and owned airplane, stationary combustion associated

with generators at the branches and fugitive emissions of refrigeration gases.

b) Scope 2: Indirect GHG Emissions associated with Energy

Purchase of electricity from the National Interconnected System.

c) Scope 3: Indirect GHG Emissions

Mobile Combustion is associated with air travel by employees, load transportation, taxi, and motorcycle

deliveries. Emissions associated with the use of generator by the condominium where the Institution's

headquarter is located were also considered.


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3.3 Identification and quantification of GHG sources

Following we present the phases for the identification and quantification of GHG sources or carbon

stocks:

a) Steps for quantification of GHG sources

The quantification and documentation of GHG emissions and stocks should follow, where applicable, the

following steps:

- Identification of the GHG and carbon stocks sources;

- Selection of a methodology for quantification;

- Data selection and survey of the activity associated with the GHG;

- Use or development of a GHG emission factor;

- Calculation of GHG emissions and removals.

b) Methodology for exclusion of GHG sources

The exclusion of a given GHG source can be done provided that the potential contribution does not result

in material discrepancy in the total of emissions within the Inventory scope. It should be noted that the

sum of all sources excluded might not result in material discrepancy either. Those sources whose

quantification are technically not executable or has cost of excessive determination are still prone to

deletion. It can be accompanied by a proposal for future calculation of this source and a conservative

estimate, if applicable, of the GHG emission.

Compulsory declared GHG according to GHG Protocol considered in this Inventory are: carbon dioxide

(CO2), methane (CH4), nitrous oxide (N2O), hydro fluorocarbons (HFC’s), perfluorocarbons (PFC), e

sulphur hexafluoride (SF6), and Nitrogen trifluoride (NF3). The values for GWP (Global Warming Potential)

considered for each of the GHG are in accordance to criteria set by the Brazil GHG Protocol Program.

The following GWP were used in this report:


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Biogenic CO2 emissions, however, are separately reported from fossil CO2 emissions.

4. Obtained Results

4.1 Accounted Sources

4.1.1 GHG Direct Emissions

a) Mobile combustion:

Emission Source Total

Consumption

Total carbon dioxide

equivalent emitted (tCO2e)

Type o

f veh

icle

an

d

consum

ptio

n

Kerosene-powered owned airplane

43,468.44 L 110.34

Gasoline-powered Automobile

95,157.74 L

162.20

Gasoline-powered Automobile

4,241.49 Km

b) Stationary combustion:

Emission Source

Total informed fuel

consumption (liters)



Generators, diesel consumption 4,423.96 10.90


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c) Fugitive emissions:

In 2015 there were no fugitive emissions of refrigeration gases considered by the Brazil GHG Protocol

Program. There was only R22 gas replacement, not accounted for in GHG emissions inventories,

according to the GHG Protocol criteria.

4.1.2 GHG Indirect Emissions (Electricity)

Total consumption of electricity from national grid:

Electricity Consumption (grid)

Total informed consumption (Mwh/year)

Total carbon dioxide equivalent emitted

(tCO2e)

4,038.60 502.67

4.1.3 Indirect Emissions

a) Mobile Combustion

Emission Source Total traveled

(km)



Air travel 1,408,616.66 143.43

Auditor's Air travel 33,240.00 3.03

Air Transportation (loads) 11,675.18* 25.13

Land Transportation (loads) 29,002.57* 2.22

Land Transportation (taxi delivery)

32,511.10 1.46

Taxi (auditor) 2,162.93 0.33

* Data in T.Km


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b) Stationary Combustion

Emission Source Total fuel

consumption

Total carbon

dioxide

equivalent

emitted

(tCO2e)

Cond

om

iniu

m's

genera

tor

Natural Gas Consumption 69,078.08 M3

156.78

Diesel Consumption 5.525,13 L


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5. Summary of Emission Results

This Inventory describes the GHG emissions CCB BRASIL's team gathered data for activities used in the

Inventory throughout 2015, together with pertinent evidences.

The following items present the main aspects and characteristics of the 2015 Inventory, gathering all

relevant information about the limits of the Inventory and the identified emission sources.

5.1 Reporting Period

The present inventory reports GHG emissions from January, 1st, to December, 31st 2015.

Scope 1

It gathers emissions associated with fuel consumption in vehicles, an owned airplane, and generators.

Total emissions from scope 1 equals 283.43 tCO2e, while 162.20 tCO2e relates to fuel for vehicles,

following fuel consumption in airplane (110.34 tCO2e) and lastly (11 tCO2e) related to the consumption by

generators.

Emissions related to own airplane refer only until April 15, when CCB Brasil no longer owned the airplane.

There were no HFC emissions this year.

57% 39%

4%

Vehicles

Airplane Own

Generators


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Scope 2

Correspond to electricity consumption from the National Interconnected System. In 2015, total emissions

added up to 502.67 tCO2e.

Scope 3

Indirect emissions are considered in categories “Mobile Combustion” - which gathers emissions related to

dislocation of employees by air travel or taxi, and shipping through air, road travel, and use of motorcycle

delivery services -- and “Stationary Combustion”, which quantifies the emissions of the condominium's

generator.

43,15%

0,91%

7,56%

0,67% 0,44%

0,10%

47,17%

Air travel Air Travel Audit

Air Transport (loads) Land Transport (loads)

Land Transport ( Motoboy ) Taxi (audit)

Generator ( condo)


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Emissions in Tons of Carbon Dioxide (tCO2), related to year 2015, by different activities held at CCB.

Scope Category Emission Source

Emission (t)

CO2e

1 Mobile Combustion Owned Airplane 110.34

Vehicles 162.20

Stationary Combustion Generators 10.90

Fugitive Emissions HFC -

2 Stationary Combustion Electricity Generation 502.67

3 Mobile Combustion Air Travel 143.43

Air Travel Auditors 3.03

Air Transportation (loads) 25.13

Land Transportation (loads)

2.22

Land Transportation (motorcycle deliveries)

1.46

Taxi (auditor) 0.33

Stationary Combustion Generator (condominium) 156.78


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5.2 Final Results:

Scope TOTAL EMISSIONS

(tCO2e)

1 283.43

2 502.67

3 332.39

TOTAL 1,118.49

Biogenic CO2

CO2 emissions from biomass (ethanol and biodiesel) combustion add up to 40.78 t CO2, from which 98%

refer to scope 1 and 2% to scope 3.

963 909 939

713

283,43

96

347 306

461 502,67

369 434

346

590

332,39

2011 2012 2013 2014 2015

Emissions History by Scope

Escopo 1 Escopo 2 Escopo 3


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6 Final Remarks

In 2015, the Institution's Emissions Inventory presented a significant reduction in emissions in relation to

previous years.

The reduction observed represents the profile of emissions of CCB BRASIL's new operation, whose

highlights were selling the owned airplane, change in addresses of some agencies for smaller physical

locations, sensitive decrease in reimbursement of executives, and a significant decrease in air travel.

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2011 2012 2013 2014 2015

tCO

2e

Evolution of Total Emissions and Emissions Medium (t CO2e)

Change Emissions Average Change


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7 References

[Defra] Department for Environment Food & Rural Afairs. (2013). 2013 Government GHG Conversion

Factors for Company Reporting: Methodology Paper for Emission Factors. Disponível em

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/224437/pb13988-emission-

factor-methodology-130719.pdf IV

[GHGp] GHG Protocol, Greenhouse Gas Protocol: Corporate Module, World Business Council for

Sustainable Development and World Resources Institute, Revised Edition, 2004.

[IETA] IETA Verification Protocol v. 2.0, Verification of Annual Emission Reports of Installations Engaged

in EU Emissions Trading, International Emissions Trading Association, 2005.

[ISOa] ISO 14064, Part 1: Specification with Guidance at the Organization Level for Quantification and

Reporting of Greenhouse Gas Emissions and Removals, ISO, Geneva, 2006.

[ISOb] ISO 14064, Part 2: Specification with Guidance for the Validation and Verification of Greenhouse

Gas Assertions, ISO, Geneva, 2006.


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ANNEX 1 - Technical Team

1. In charge of GHG Quantification:

FOCUS TRAINING AND CONSULTING

2. Technical Team FOCUS TRAINING AND CONSULTING

Fernando Ramos Pavan

Cláudio Bicudo Mendonça


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ANNEX 2 - Calculation worksheets

Excel worksheets presenting the calculation for emissions are part of this document.


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Independent auditors' limited assurance

report on the data of the Corporate Direct

and Indirect Greenhouse Gas Emissions

Inventory Report for 2015 To the Board of Directors and Stockholders China Construction Bank (Brasil) Banco Múltiplo S.A. São Paulo - SP

Introduction

1 We have been engaged by China Construction Bank (Brasil) Banco Múltiplo S.A. ("CCB Brasil") to present our limited assurance report on the data included in the Corporate Direct and Indirect Greenhouse Gas Emissions Inventory ("GHG Inventory Report for 2015") of China Construction Bank (Brasil) Banco Múltiplo S.A., for the year ended December 31, 2015. This report includes, among other information, the procedures for significant quantifications, the criteria and the methodology for the preparation of the GHG Inventory Report for 2015, and the organizational and operational boundaries of the activities of CCB Brasil.

Management's responsibility for the GHG Inventory Report for 2015 2 The management of CCB Brasil is responsible for the preparation and fair presentation of the data included in the GHG Inventory Report for 2015, in accordance with the criteria defined in paragraph 3 and boundaries defined in paragraph 4 herein and for such internal control as it determines is necessary to enable the preparation of information free from material misstatement, whether due to fraud or error. 3 The criteria for assessing the measurement, capture, calculation, estimation and reporting of the emission data of CCB Brasil in the GHG Inventory Report for 2015 were based on the following documents: (a)FGV-GVCes/WRI: Brazilian GHG Protocol Program Specifications: Accounting, Quantifying and Reporting of Corporate Greenhouse Gas Emission Inventories (2nd edition). (b)ISO 14064-3:2007 - Greenhouse Gases Part 3: Specification with guidance for the validation and verification of greenhouse gas assertions. 4 In accordance with the criterion of the FGV-GVCes/WRI, mentioned in paragraph 3, the organizational boundary of the GHG Inventory Report for 2015 was defined based on the operational control approach. The operational boundaries considered include the sources of emissions of scopes 1 and 2 of the GHG Protocol, as well as air and land staff transportation, cargo transportation by third parties and fuel consumption by the condominium's generators in scope 3:


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Auditor's responsibility 5 Our responsibility is to express a conclusion on the data of the GHG Inventory Report for 2015 of CCB Brasil, based on our limited assurance engagement carried out in accordance with the Technical Communication CTO 01, "Issue of an Assurance Report related to Sustainability and Social Responsibility", issued by the Federal Accounting Council (CFC), based on the Brazilian standard NBC TO 3000, "Assurance Engagements Other than Audit and Review", also issued by the CFC, which is equivalent to the international standard ISAE 3000, "Assurance engagements other than audits or reviews of historical financial information", issued by the International Auditing and Assurance Standards Board (IAASB). Those standards require that we comply with ethical requirements, including independence requirements, and perform our engagement to obtain limited assurance that the data of the GHG Inventory Report for 2015, taken as a whole, are free of material misstatements, in accordance with the criteria defined in paragraph 3 and boundaries defined in paragraph 4 above. 6 A limited assurance engagement conducted in accordance with the Brazilian standard NBC TO 3000 and ISAE 3000 mainly consists of making inquiries of management and other professionals of the entity involved in the preparation of the information, as well as applying analytical procedures to obtain evidence that allows us to issue a limited assurance conclusion on the information, taken as a whole. A limited assurance engagement also requires the performance of additional procedures when the independent auditor becomes aware of matters that lead him to believe that the information and data on the GHG emissions taken as a whole might present significant misstatements. Main procedures performed 7 The procedures selected are based on our understanding of the aspects related to the compilation and presentation of the data included in the GHG Inventory Report for 2015, other circumstances of the engagement and our analysis of the areas in which significant misstatements might exist. The following procedures were adopted: (a) Planning the work, taking into consideration the criteria defined in paragraph 3 and boundaries defined in paragraph 4 above, the materiality and the volume of quantitative and qualitative information and the operating and internal control systems that were used to prepare the data included in the GHG Inventory Report for 2015 of CCB Brasil. (b)Understanding the calculation methodology and the procedures adopted for the compilation of emission data through interviews with the managers responsible for the preparation of the information. (c)Applying analytical procedures and selective testing, as applicable, to quantitative information and making inquiries regarding the qualitative information and its correlation with the data included in the GHG Inventory Report for 2015. (d)Making a technical visit to the corporate office in São Paulo, in order to interview the members of management and collect data and information. 8 We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our limited assurance conclusion.


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Scope and limitations 9 The procedures applied in a limited assurance engagement are substantially less detailed than those applied in a reasonable assurance engagement, the objective of which is the issuance of an opinion on the data of the GHG Inventory Report for 2015. Consequently, we are not able to obtain reasonable assurance that we would become aware of all significant matters that might be identified in an assurance engagement, the objective of which is the issuance of an opinion. If we had performed an engagement with the objective of issuing an opinion, we might have identified other matters and possible misstatements in the data included in the GHG Inventory Report for 2015. Therefore, we do not express an opinion on these matters. 10 Non-financial data are subject to more inherent limitations than financial data, due to the nature and diversity of the methods used to determine, calculate and estimate these data. Qualitative interpretations of the materiality, relevance, and accuracy of the data are subject to individual assumptions and judgments. 11 The information and data with respect to the actions and activities regarding sustainability, general information and views related to climate change, the description of the managing activities related to the process for preparation of the GHG Inventory Report for 2015, and the description of operational activities, which are not a basis for the inventory, are not part of the scope of our work and, therefore, are not covered by our limited assurance report.

Conclusion 12 Based on the procedures performed, described herein, no matter has come to our attention that causes us to believe that the data of the Corporate Direct and Indirect Greenhouse Gas Emissions Inventory Report of China Construction Bank (Brasil) Banco Múltiplo S.A. for the year ended December 31, 2015 are not presented, in all material respects, in accordance with the criteria described in paragraph 3 and the boundaries defined in paragraph 4 above. São Paulo, April 18, 2016 PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5 André Pannunzio Candido Oliveira Contador CRC 1SP196603/O-1

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China Construction Bank Brazil - CCB