Annual Sustainability Report 2010 Table of Contents 5. Introduction 92. Relationships 94. Employees 100. Clients 112. Stockholders 113. Suppliers 116. Government 14. Results of the main challenges taken on in 2010 117. Media and public relations 18. Profile of the organization 119. Environment 22. Main financial indicators 128. Social and cultural investments 24. Operations in Brazil and abroad 130. Fundação Itaú Social 26. Outlook and strategies 134. Instituto Unibanco 136. Instituto Itaú Cultural 8. M essage from the Chairman of the Board 10. Message from the CEO 12. 2010 Highlights 30. Vision of sustainability 34. Corporate governance 138. Awards and recognitions 36. Governance structures 140. Appendices 42. Accountability 43. Risk management 52. Crisis management 148. Itaú Unibanco Assurance Statement 53. Ethics management 54. Business 57. Commercial banking 76. Itaú BBA 81. Consumer credit 84. Insurance, private pension and capitalization 90. Business abroad 2 Summary 2 140. Global Reporting Initiative (GRI) Cross Index 151. Independent Auditor’s Limited Assurance 153. GRI Application Level Check 154. Editorial Team Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 3 4 4 Introduction Working Accumsan eget together fringillafor itaú sustainability Itaú Unibanco Holding S.A. publishes its Annual Sustainability Report in accordance with the guidelines of the Global Reporting Initiative (GRI) and Associação Brasileira das Companhias Abertas (Brazilian Association of Publiclyheld Companies). This includes relating its economic, social and environmental performance to the 10 principles of the Global Compact, an initiative of the United Nations (UN) to disseminate corporate responsibility. (Profile 3.3 and 4.12) In accordance with the indicators and the other relevant information, this report is self-declared as application level A+. To be included at this level, it is necessary to identify which elements of the GRI G3 Guidelines structure were applied in determining the content of the report and to present the forms of management of relevant aspects of sustainability. It is also necessary to show performance by means of indicators identified as relevant for the organization and its stakeholders, including the indicators of the financial services sector supplement. (See Appendix 1 for details of the GRI indicators and Appendix 4 for the certification of Itaú Unibanco’s GRI status.) The information provided in the Annual Sustainability Report was subject to assurance by the audit firm PricewaterhouseCoopers, as shown in Appendix 3. (See Appendix 2 for Itaú Unibanco’s own assurance statement.) (Profile 3.13) 5 5 Presentation The information on performance consolidates the operations of the whole organization in Brazil and abroad and refers to the period from January 1 to December 31, 2010. (Profile 3.1, 3.6 and 3.8) The limitation provided for in the GRI guidelines – Definition of Content, Quality and Scope of the Report will be complied with within five years to include all the organizations that are subject to the control or significant influence of Itaú Unibanco Holding S.A. (Profile 3.7) Among the most important factors in the quality of a sustainability report are the inclusion of stakeholders and relevance, that is, the prioritization of essential topics and subjects for conducting business from the point of view of the company itself and society. Among the main stakeholders of the company are the clients, employees, stockholders, suppliers, government and media. (Profile 4.14) The Annual Sustainability Report of Itaú Unibanco Holding S.A. was based on certain important procedures to meet these conditions. The Essência da Sustentabilidade (Sustainability Essence) prepared at the end of 2008 formalized the eight main challenges for the organization’s sustainable operation and was used as a reference in the selection of this report’s content. The Essence is the result of a first reflection, which involved consultations with specialists and employees, as well as an analysis of benchmarks from the financial sector. In addition to this guiding document, interviews with the company’s employees were also held. Accordingly, the content of this publication presents the evolution of the practices described in the previous report (2009) and makes projections for 2011. (Profiles 3.2, 3.5, and 4.15) 6 Presentation 6 24 The 2010 Itaú Unibanco Holding S.A. Annual Sustainability Report is the result of the coordinated efforts of hundreds of people, who provided information and indicators of the bank’s performance during the year. It reflects a process of continuous improvement and strengthening of sustainability practices, and, therefore, all comments, criticisms and suggestions are extremely important and should be sent to comunicacacao.corporativa@itau-unibanco. com.br. (See Appendix 5 for details of the report’s editorial team.) (Profile 3.4) In addition to this printed version, Itaú Unibanco has made available an online report with additional content at http://www.itauunibanco.com.br/ relatoriodesustentabilidade/. Transparency and accountability to society are important to maintaining the trust of all of our stakeholders. For this reason, the sustainability report is published on an annual basis, and always contains a complete analysis of the targets set for each area in the previous report. (Profile 3.3) Our responses to the GRI indicators are presented in the table on page 140. (Profile 3.12) Nosso Jeito de Fazer, a set of 10 attitudes and values that guide all our relationships. This is the language we want to speak both inside and outside the house. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 7 Message from the Chairman of the Board What was a well-founded hope a year ago, when I wrote my message a high growth level and its strong connections with Latin America for Itaú Unibanco’s last annual report, is now an unquestionable fact: created a favorable environment for commodities, the prices of Brazil has easily overcome the global economic crisis, which many which increased significantly and improved the terms of trade. In described as a great depression. In addition having come through 2011, although the economic outlook indicates stability, we will have the crisis without major surprises, Brazil was one of the first nations to at least one major challenge in Brazil: Brazil’s inflation reached 5.9% regain stability after the severe turmoil in the international markets. and it will be necessary to bring it down to the center of the target And this was only possible because, for the past two decades, Brazilian of 4.5% to avoid losses in the population’s purchasing power. An political stability has existed side by side with economic stability. appropriate combination of monetary and fiscal policies would help minimize the costs of this transition. The year 2010 was characterized by elections and another democratic transition – a transition that represented the final chapter For Itaú Unibanco, 2010 was a year characterized by the completion, of a fortunate historical cycle, during which we had two presidents ahead of the expected deadline, of the integration of the brands, with strong institutional commitment. Fernando Henrique Cardoso systems and branch network operations of the banks that now faced difficult times, but he knew how to lead Brazil towards the form the new institution. This was the last stage of the merger much desired economic stability, by means of a bold and in-depth process between Itaú and Unibanco, which, therefore, was officially program of reforms. He received one country, and delivered another. completed. A little more than two years after November 3, 2008, a Luiz Inácio Lula da Silva succeeded him and had the unquestionable date when the history of the financial markets in Brazil was changed merit of preserving, above partisan issues, the fundamentals of our forever, I am happy to see on how many fronts – and in how many economy. And despite being a popular president, he never gave in ways – the proposal for combining the qualities of the institutions to the temptations of populism or sought to perpetuate himself in that make up Itaú Unibanco is present in our daily lives. office for successive reelections, as we have seen in other countries in Latin America. The newly-elected president, Dilma Rousseff, will In the strength of the Itaú brand, which has been obtaining more face important challenges ahead – particularly in areas such as market share and visibility in Brazilian cities; in the Uniclass segment, education, health, infrastructure and public security – but she has which introduced the high income concept in our retail branches; in the inherited a country that is undoubtedly more stable and developed broad concept of convenience, which today is represented by Itaú 30 than it was before the terms of the last two presidents. Horas (Itaú 30 Hours); in the integration process conducted with high efficiency at Itaú BBA (Wholesale Banking ‒ IBBA); in Private Banking, in 2010 was also characterized by the vigorous recovery of economic the corporate segment, in the credit card, asset management, insurance, activity in Brazil. Gross Domestic Product (GDP) grew around 7.5% and retail banking areas and in all of our administrative areas – wherever and unemployment dropped to 6%, the lowest level in many years. you look it is easy to see how the combination of two banks, which Society consumed more and invested more. The consumption of were already outstanding in their own right, is building an extraordinary durable goods, for example, exceeded pre-crisis levels. Investments organization. And the results already reflect this progress. The bank’s net in the real estate industry resumed, quickly reducing the housing income in 2010 showed a growth of 32.3% in relation to 2009, reaching deficit. Small and medium-sized companies and large corporations R$13.3 billion. On December 31, 2010, our shares were traded at found a proper environment in which to grow. The income US$22.84 on the New York Stock Exchange (NYSE), 5.1% over the closing generated in this process has been gradually distributed on a price in the previous year. more equal basis, benefiting all social classes, particularly the most underprivileged. And the financial sector has been significantly An institution that already operates in a fully integrated way must contributing to this scenario by means of varied credit instruments, also have a differentiated culture, capable of inducing the attitudes which, as a proportion of GDP, reached 46.3% in November. necessary to support its bold growth plans, whether quantitative or qualitative. With this in mind we launched, in February 2010, a 8 This result was particularly notable in an international environment corporate culture project for Itaú Unibanco, named Nosso Jeito de that is still uncertain, with growth challenges in some developed Fazer (Our Way to Do Things), whose development involved a broad countries. More vigorous recovery in other emerging countries, on debate with employees from many regions and from different the other hand, helped to balance this scenario. China maintained functions and positions. It all started with the definition of our Message from the Chairman of the Board 8 vision, whose objective is to be a leading bank in client satisfaction and sustainable performance. Next, the culture project unfolded into a set of 10 attitudes that will allow us to achieve this vision. The launch of Nosso Jeito de Fazer involved thousands of people from across the organization and is gradually being incorporated into each of the human resource management pillars within the company. We strongly believe in corporate culture as a differentiating – and, therefore, decisive – factor in a company’s trajectory. In addition to being large, our company aspires to be extraordinary. Accordingly, we understand that the dissemination of the attitudes expressed in Nosso Jeito de Fazer will provide Itaú Unibanco with a singular, unrivaled culture, which will be converted into an important competitive advantage in the global market. In line with this vision, in 2010, Itaú Unibanco’s Board of Directors disclosed an important and ambitious program to recognize and publicize the professionals who are making a difference and leading the organization’s future direction by making them partners. This initiative, which is unique among large Brazilian banks, was named Programa de Sócios Itaú Unibanco Holding (Itaú Unibanco Holding Partners Program) and is a clear demonstration of our institution’s concern about reinforcing and disseminating one of its main characteristics: the business owner’s attitude. Continuing with the effort to spread this distinct culture, in 2011, Itaú Unibanco will turn its attention to a topic that is absolutely decisive for the success of institutions: the increasingly common practice of meritocracy. We understand that meritocracy means having the right person in the right place and with the proper recognition – which will be more differentiated the better the individual’s performance. To achieve this goal, which is already part of the set of attitudes that we are keenly pursuing, we will hold a wide-ranging discussion on the matter. This discussion will have a strong impact on the way we make decisions and manage the careers of each of our more than 100,000 professionals. Based on everything I have stated, I am deeply excited about the prospects for Brazil and for our bank this year. The year 2011 promises to be even more comprehensive in terms of achievements than 2010, bringing us ever closer to the ambitious vision we have set for the Itaú Unibanco conglomerate. (Profile 1.1) Sincerely, “In addition to being large, our company aspires to be extraordinary.” Pedro Moreira Salles Chairman of the Board of Directors of Itaú Unibanco Holding S.A. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 9 Message from the CEO Looking back at the events that took place at Itaú Unibanco while preparing to write this message, I must say that I could not help being impressed with the achievements and results of the bank in such an intense year. A lot happened and the impression we all have here is that many years were condensed into just one. And this is exactly right. Two years into our merger, we had the great pleasure of announcing that the integration of our branches had been completed in record time. The challenge was immense and its achievement was only possible thanks to the remarkable effectiveness of our teams, which worked in a coordinated and organized way to make this change as painless as possible for our clients. This process was a success and I am sure that it has become an international benchmark, particularly in view of its scale. The integration allowed us to proudly announce that, yes, one plus one is much greater than two. In 2010, there was also an important internal development, which laid the foundations for the bank we want to build in the future: the launch of our vision and our culture, Nosso Jeito de Fazer. I am sure that, based on the 10 attitudes that make up Nosso Jeito de Fazer and driven by our vision, we will be able to deliver an extraordinary bank. Although we have completed important stages such as these, new challenges appear every day. Taking into consideration our commitment to leadership in sustainable performance and client satisfaction, we must continuously rethink the way we operate, be attentive to the development of competition and adapt to the changes “I am sure that, based on the 10 attitudes that make up Nosso Jeito de Fazer, we will be able to deliver an extraordinary bank.” seen in Brazil in recent years, as well as to the technological changes over the past decade. If we take a close look at Itaú Unibanco’s figures, there is no doubt that the merger of these important players in the Brazilian financial market was positive for stockholders, clients, employees and society in general. This can already be seen in our results. Our net income reached R$13.3 billion in 2010, with an average return on stockholders’ equity of 23.6%. Total free, raised and managed own assets reached a record balance of R$1 trillion. 10 Message from the CEO 10 The balance of the loan portfolio at the end of 2010 totaled and high school education in Brazil, this has already been R$335.5 billion, an increase of 20.5% in relation to the same happening. period of 2009. Among the highlights, the real estate loan portfolio, taking into consideration both individuals and Take care of the present, plan for the future. Understand legal entities, jumped 55.8%, and the portfolio of small and that the world is changing and that society is calling for medium-sized companies, 31.2%. new commitments that are potentially harder to put into practice due to their challenging and ambitious nature, but Our efficiency ratio is the best in the financial market today that have an enormous potential to benefit all. Therefore, we at 48.8%. These figures are a consequence of an impressive believe that, in this Annual Sustainability Report, our major scale of 4,911 branches and Customer Site Branches (CSBs), commitment to express is to following up on the changes a large base of more than 40 million clients in all business in the world, society, and our clients, as well as anticipating segments, and the efficiency of our team of more than demands and needs so that, by means of technology, 108,000 employees. expertise and the right attitudes, we can build long-lasting and productive relationships with all. Brazil is growing in a balanced and sustainable way and Itaú Unibanco has been accompanying this growth. We Today, we already have the market’s recognition of our continue to expand credit for individuals and legal entities, practices, such as the creation of sustainable finance and we are always attentive to the maintenance of proper products, our participation in the Global Compact, and our levels of default. The conscientious use of money has continued presence no the Dow Jones Sustainability Index been an important tool for carrying out the bank’s sale of (DJSI) and the Bovespa Corporate Sustainability Index (ISE) products and provision of services in the best way possible. from the outset. These show us, without a doubt, that we are A long-lasting relationship with our clients depends on heading in the right direction. this and we have been making a constant effort within the organization to prioritize topics such as quality and client But this is not enough for a bank that aims to be a leader satisfaction in decision-making. in sustainable performance and client satisfaction. Every day, we must review what we are doing and ask ourselves This is even more important as we increase our credit if we can do better. We must focus, without exception, on card base, which now has 26 million clients if we sustainable performance, on creating the maximum value for combine the operations of Itaucard and Hipercard. We the bank by providing our clients with the best the market know that Brazil currently has more credit card holders has to offer, on improving the bank’s efficiency ratio, and on than open current accounts. In fact, the credit card practicing meritocracy totally based on Nosso Jeito de Fazer, has become the first banking instrument for people with no deviations. who have climbed up the social ladder and started to consume financial instruments. Not just one, but many, big dreams are necessary. Therefore, it is increasingly evident that financial education This is how I see the future of Itaú Unibanco. An organization practices, supported by our Uso Consciente do Dinheiro made up of people who aspire and contribute to a fairer (Conscious Use of Money) platform, are becoming more society and, more importantly, one that is more prosperous necessary. We know that we still have a long way ahead and happy. (Profile 1.1, 1.2 and 2.9) of us. Not only Itaú Unibanco, but Brazil too, must include this matter in its agenda and also start to teach it in the classroom. In our arena of social private responsibility, by Sincerely, means of Fundação Itaú Social (Itaú Social Foundation) and Instituto Unibanco (Unibanco Institute), which are both dedicated to improving the quality elementary, middle, Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Roberto Setubal Chief Executive Officer of Itaú Unibanco Holding S.A. 11 2010 Highlights New vision and culture Fully integrated branches During the Encontro entre Líderes (Leaders’ Meeting), Less than two years after the largest merger in the Brazilian held in February 2010 with the participation of 14,000 financial system, Itaú Unibanco completed in October 2010 employees, the new vision and the new culture of Itaú the integration of its entire service base throughout Brazil. In Unibanco were launched. To this end, we looked to Modo aggregate, this involved the migration of over 1,200 banking Itaú de Fazer (Itaú’s Way) and Jeito Unibanco (Unibanco’s service centers of Unibanco, creating a network of almost Style). We combined the best of the two cultures with new 5,000 units across Brazil, all carrying the Itaú brand. challenges and approaches. After outlining the new vision satisfaction), we developed our Nosso Jeito de Fazer, or “10 Itaú Unibanco is the largest private financial institution in Brazil Commandments”, a set of ten attitudes and values that In an annual survey conducted by Exame, a magazine dedicated guide all our relationships and the language that we wish to economics and business, Itaú Unibanco ranked number one to use, inside and outside our walls. among the 50 largest banks in Brazil, based on stockholders’ (to be a leading bank in sustainable performance and client equity. This information was published in the special 2010 Todos pelo Cliente (All for the Client) Melhores & Maiores (2010 Best and Largest) issue of Exame. The Todos pelo Cliente attitude, the first of the ten listed in Nosso Jeito de Fazer, is one of the main driving forces behind the work Created from the merger between the banks Itaú and Unibanco, carried out by all employees of Itaú Unibanco. With this attitude in which was announced in November 2008, Itaú Unibanco is mind, we seek to keep our focus on the satisfaction of our clients. currently one of the ten largest banks in the world in market value. Its operations cover more than 1,000 municipalities in Brand management Brazil, in addition to branches and offices in 19 countries and two The color orange, as well as the slogans “feito para você” (made territories (the Cayman Islands and Hong Kong) in the Americas, for you), “30 Horas” (30 hours), and “i digital”, are some of the Europe, Asia and the Middle East. elements that have helped us build our brand identity and have given it an importance that is consistent with the size of Itaucard stores our organization. Beyond profit and the products and services In 2010, 31 stores were opened throughout Brazil to serve it offers, Itaú Unibanco is increasingly seeking to take on a lead Itaucard clients. These are banking service centers that stand role in transforming society, acting as a company in tune with out for not marketing cards, because they have been created its time, which recognizes current needs and opportunities to operate as channels of exclusive access with the sole task but focuses on shaping a brighter future. By understanding of supporting clients. the scale of this role, we have been able to understand the importance of managing the asset that is our brand. The Itaucard stores make perfect sense in view of the number of active credit card users, and the fact that more than half The most valuable brand in Brazil for the seventh consecutive time of them are not Itaú Unibanco’s clients. The objective of the Among the factors that have contributed the most to the closer to those of non-account holders so that problems and appreciation of the Itaú brand, we highlight the improving doubts can be solved. These banking service centers started and consistent financial results, the progressive consolidation to be opened in the first quarter of 2010 and, today, between of the operations as a multiple-service bank under the Itaú 150 and 350 clients visit them every day. Among the problems corporate brand, and the strong participation of the bank solved by these stores are the renegotiation of debts, issuing in sustainability-related issues. The successful merger with of copies of documents, clarifications on bills and rights, and Unibanco in 2008 is also an important fact that has enhanced granting of higher credit limits. (Profile 4.16) (Economic the brand’s value in recent years. Management Approach) 12 2010 Highlights 12 Itaucard stores is to bring the operations of account holders Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 13 Results of the main challenges taken on in 2010 Results of the main challenges taken on in 2010 (Profile 1.1 and 1.2) Focus Challenges for 2010 Transparency and governance Improve communication and transparency in contracts, bills and client statements, so as to make them more clear and understandable. In order to meet this challenge, several actions were taken, such as new contracts for clients; review of fees related to Advances to Depositors; consultation on the history of Limite Itaú para Saque (Itaú Overdraft Limit) - LIS charges on statements; review of credit card bills; Conscious Use Tips and Executive Summary of Credit Cards; the creation of the Total Effective Cost for vehicle financing; improvements in communication and in the process of reimbursing the Tarifa de Boleto (Bill Fee) in Itaucred; the creation of the new guidebook for Itaú Real Estate Loan clients; the Garantec Executive Summary; and the folder containing explanations of capitalization. Client satisfaction Complete the integration process at the administrative level. The integration process, to the extent it refers to the transfer of people, payrolls, incentive models and the structure as a whole, among other related items, was completed in December 2010. Client satisfaction Reduce disagreements with clients, thus decreasing the number of complaints. Itaú Unibanco recorded the best performance among banks in the Problem Solving Increase rate in the preliminary phase through Preliminary Information Letters (Cartas de Informações Preliminares – CIPs) It resolved 79.1% of problems, exceeding the target of 75% set for 2010, and improving on the rate of 69% recorded in 2009. In relation to the performance in the Consumer Protection and Advisory Program (Procon) Complaint Reduction rate, we ranked third place among banks. The volume remained basically stable in the comparison between 2010 and 2009 (growth of 1.4%). As to the Hearing Settlement Increase rate, we reached 65.1%. Although we did not reach the established target of 70%, the performance was better than in 2009, when the institution had a 64% rate of success. Client satisfaction Increase transparency in client relationships and strengthen our partnerships with consumer protection agencies. During 2010, we strengthened our relationships with the many different agencies of the Consumer Protection System. In order to achieve this goal, we held several meetings with these agencies aimed at continually strengthening the relationships. This will enable the permanent development of an agenda for transparency within the bank, by means of a proactive dialogue, discussion of the institution’s positioning and identification of opportunities for improvement of harmonious consumer relations and client satisfaction. Client satisfaction Strengthen the public commitment to listen to clients and meet their demands through the available service channels. In 2010, we signed a commitment with the Departamento de Proteção e Defesa do Consumidor (Consumer Protection and Defense Department – DPDC) of the Ministry of Justice – Public Indicators Project. This involved pledges to reduce complaints and increase both solutions and settlements. Social and environmental criteria Undertake more initiatives for the collection and reuse of rainwater. The installation of water tanks for collecting rainwater (reused in toilets in building A of the Tatuapé Administrative Center) began. The installation is expected to be completed in 2011. Social and environmental criteria Replace the flush valves in all administrative centers to achieve minimum savings of 20% to 40% in water consumption. All the floors of the main administrative buildings are undergoing renovations. The new layout includes more economical taps, as well as dual flush valves and urinals that consume 0.8 liters of water per flush. Renovations will continue in 2011. Social and environmental criteria To increasingly include in technical projects materials, suppliers and technologies that enhance eco-efficiency gains. All the renovations in the conglomerate have included materials for energy gains, such as more efficient lamps and reflective blinds, which decrease the absorption of heat, thus enabling the use of air conditioners at lower levels. Materials that are less harmful to the environment have also been used. This is the case with the new fitted carpets, whose production emits fewer greenhouse gases. The new building C of the Tatuapé Administrative Center, which is still in the design stage, will be built according to the Leadership in Energy and Environmental Design Certification standards. Social and environmental criteria Implement the environmental management system in operations. The Tatuapé Administrative Center, one of the main administrative buildings, is going through the International Organization for Standardization (ISO) 14001 certification process. As one of the improvements already implemented at that site, we can highlight the creation and maintenance of an environmental management system that controls and measures the general consumption of resources, as well as the production of waste and other items that may have an impact on the environment. Social and environmental criteria Use recycled water in the cooling towers of other administrative buildings, in addition to those that already adopt this process. The project is still under review. Social and environmental criteria Supply another administrative center with renewable energy generated by the Bandeirantes Thermoelectric Plant. Since May 2010 the Tatuapé Administrative Center has been supplied with energy generated by the Usina Termoelétrica Bandeirantes (Bandeirantes Thermoelectric Plant), thus totaling seven administrative buildings supplied by the energy arising from this power plant. Social and environmental criteria Prepare and implement a waste management program that establishes processes, records evidence and encourages service providers to improve their practices. The waste management program was implemented at the Tatuapé Administrative Center for the purposes of controlling, monitoring and reducing the generation of waste and its environmental impacts, thus ensuring the practice of proper waste disposal. It is probable that the measures taken at this site will be gradually adopted at the other sites. Social and environmental criteria Equip another telepresence room. Another five telepresence rooms were equipped, totaling nine rooms in all buildings of the conglomerate. Increase and communicate the practices of proper IT equipment disposal. Target achieved with the adoption of sustainable disposal in the network of branches and storerooms. In 2010, over 3,000 metric tons of technological waste from data centers, work stations, branches and inventories were disposed of properly. In relation to the communication of these measures to employees, in 2010 we conducted two campaigns that reached approximately 20% of the institution’s employees, and collected over 3,200 items, totaling more than 3 metric tons of electronic waste. Social and environmental criteria 14 Challenges taken on for 2010 14 Result Comments Focus Challenges for 2010 Climate change Strengthen the fight against climate change, with mitigation/reduction actions in our operations. The actions/solutions performed in Green IT avoided emissions of CO2 [energy consumption (kWh) converted into CO2]. During 2010, we consolidated the virtualization of servers, the modernization of the data center, and the implementation of the Virtual Desktop Infrastructure solution, in addition to changing cathode ray tube (CRT) monitors to liquid crystal display (LCD) screens and using telepresence and videoconference rooms. Financial education Improve the financial education initiatives within the scope of the Uso Consciente do Dinheiro program. In 2010, we developed initiatives such as: TV Itaú Corretora (Itaú Corretora TV), Simulador Projeto Vida (Life Project Simulator), Itaucard e Livraria Cultura, Hipercard and Colaboradores Endividados (Indebted Employees). These actions were aimed at improving financial education within the scope of the Uso Consciente do Dinheiro program. Improve the internal and external disclosure of the Essência da Sustentabilidade, based on the findings from the Stakeholders’ Panels held in 2009. In July 2010, we released the second edition of the Banco de Ideias Sustentáveis (Sustainable Ideas Databank – BIS), a program aimed at involving and encouraging employees to contribute ideas about sustainability that can be implemented at the bank. In this second edition, the following new ideas were presented: • Popular vote – employees had the opportunity to express their opinions and, together with the Sustainability Commission, choose the top five ideas of this edition; • Blog – gives everybody the opportunity to express their opinions and improve the submitted ideas. In 2010, there were 37 days for submitting ideas and 1,142 were put forward – in 2009, 1,300 ideas were put forward in 150 days. The key topics were the bank’s top eight sustainability challenges that make up the Essência da Sustentabilidade. Stakeholder engagement Disseminate the new corporate culture. In 2010, through practices based on Nosso Jeito de Fazer, we were able to start spreading the bank’s new corporate culture. Many actions were taken during the year, such as the Encontro entre Líderes, the Portas Abertas (Open Doors) program and the Walther Moreira Salles Award, in addition to the alignment survey, the organization of workshops and the drawing up of the map of Nosso Jeito de Fazer. Stakeholder engagement Improve the process of training leaders by implementing the Leadership Academy. Launched in 2010, the Leadership Academy is an educational strategy aimed at the continuous development of the institution’s leaders. The strategy offers several training programs for the development of the skills necessary for conducting business, managing people and achieving personal excellence. The training programs are targeted at employees who have become leaders and at newly hired or promoted managers. Stakeholder engagement Manage talents with a focus on recruitment, development and retention. The 2010 Trainee Program of Itaú Unibanco was completed with 95% retention, while the market average is 70%. In 2011, this program attracted over 43,000 applicants. Stakeholder engagement Evaluate all of our recurring suppliers in accordance with the risk matrix. All of our recurring suppliers are evaluated in accordance with the risk matrix, in which risk rating groupings are assigned according to potential loss level and service continuity risk, based on the following criteria: risk in operations, ease of replacing the supplier, access to the bank’s confidential information, likelihood of labor claims, financial importance of the group, and risk to image. The risk matrix of the group was defined and made available on the procurement management SharePoint to the entire team. The internal policy and the ISO procedure include the evaluation and approval criteria according to the risk matrix of the group. Stakeholder engagement Improve the website of suppliers, using methodologies adopted after the merger. Several improvements were implemented in the supplier system, with the inclusion of new managerial status and the internal registration of suppliers, the inclusion of documents for additional analyses, the determination of new fields – which enable more in-depth analyses – and the development of a system for automating the prevention of money laundering process. In 2011, the Conheça seu Fornecedor (Know Your Supplier – KYS) automation solution will be implemented, along with other improvements. Stakeholder engagement Increase the control and efficiency of the suppliers’ reference file. The control and efficiency of the reference file were improved by means of the following set of actions: processing of the database of suppliers with annual revenue over R$300,000 together with the procurement departments, support from compliance areas so that all recurring suppliers are approved, publication of the internal policy and ISO updates, and monitoring of larger suppliers, which represent 80% of payments. Stakeholder engagement Strengthen the bank’s relationship with the media with a focus on communication about the integration process, topics related to sustainability and financial education, and our consolidation as a global competitor. In 2010, we organized the Sustentabilidade em Pauta (Sustainability on the Agenda) meetings and the second edition of the Itaú de Finanças Sustentáveis (Itaú Sustainable Finance) program, which recognized the work presented by journalists and students on this topic. Stakeholder engagement Strengthen our relations with other opinion makers through institutional relations events and actions. Relations were strengthened through events such as Diálogos de Sustentabilidade (Dialogues on Sustainability) and Sustentabilidade em Pauta, in addition to events promoted by the Public Relations team together with many areas of the bank. Stakeholder engagement Promote and enhance the quality of the debate about public full-time education policies. In 2010, Fundação Itaú Social held in São Paulo the Colóquio de Educação Integral (Full-time Education Colloquium), which was extended into four regional meetings and distance-learning courses. Stakeholder engagement Increase the visibility of successful full-time education experiences. The Tendências para Educação Integral (Full-time Education Trends) publication was prepared in partnership with Unicef under the technical coordination of Centro de Estudos e Pesquisas em Educação, Cultura e Ação Comunitária (Center of Studies and Research on Education, Culture and Community Action). This publication was released during the launch of the Prêmio Itaú-Unicef (Itaú-Unicef Award) in March 2011. Develop and disseminate methodologies for training youths. Fundação Itaú Social organized and published the content of the Jovens Urbanos (Urban Youths) program so that it could be replicated by entities that work with young people. In partnership with Instituto Unibanco, it held the Ações Sociais com Juventude (Social Actions with Youths) seminar and sponsored research on the young, such as the Índice de Audiência no Ensino Médio (High School Attendance Rate), Perfil Sócioeconômico e Demográfico dos Jovens da Rede Pública de Minas Gerais (Social, Economic and Demographic Profile of the Young People from the Public Education System of the State of Minas Gerais), Evasão Escolar entre as Etapas do Ensino Fundamental e Médio (Dropout Rates Between Elementary and Middle School and High School), Fluxo Escolar entre as Etapas do Ensino Fundamental e Médio (Grade Progress Between Elementary and Middle School and High School), Relação entre Qualidade e Permanência do Jovem no Ensino Médio (Relationship between Quality and Continuity of High School Students), and Modalidades de Ensino Médio no Brasil: Relação com Evasão e Abandono (Types of High School Education in Brazil: Relationship with Dropout Rates and Withdrawal). Stakeholder engagement Stakeholder engagement Result Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Comments 15 Tables of challenges Focus Challenges for 2010 Result Comments To overcome this challenge, in 2010, we undertook the Melhoria da Educação no Município (Improvement of Education in the Municipality) program of Fundação Itaú Social, which operated in 18 municipalities in the State of Paraná. The program benefited 77 people, namely municipal education secretaries, principals, teachers, municipal and guardian councilors, and technicians from the education department. 90% of the municipalities completed the training in 2010, 100% of which established commissions with representatives from different institutions, and 100% of the municipalities prepared a diagnosis. Also, meetings were held in partnership with the União Nacional dos Dirigentes Municipais de Educação (National Association of Municipal Education Directors), in which technical speeches were given on management topics (São Bernardo, Vitória, Fortaleza and Olinda), with an average of 500 participants per meeting. These were in addition to the Brasil Hoje (Brazil Today) meetings for the training of managers (40 training meetings of four hours each for 1,243 professionals) and the Formação de Educação Integral (Full-time Education Training) meetings (four Regional Training Meetings, bringing together organizations participating in the Prêmio Itaú-Unicef from various places in Brazil, such as Curitiba, São Paulo, Salvador and Rio de Janeiro). We can also mention the expansion initiatives of the Encontros Regionais de Formação (Regional Training Meetings), whose activities were carried out together with partners to increase the debate on full-time education in the following cities: Natal, State of Rio Grande do Norte; Betim, State of Minas Gerais; Diadema, State of São Paulo; Campinas, State of São Paulo; and João Pessoa, State of Paraíba). Fundação Itaú Social is responsible for the publication of Modelo de Escola Charter: A Experiência de Pernambuco (The Charter School Model: the Experience of the State of Pernambuco). Stakeholder engagement Train education managers. Stakeholder engagement Produce knowledge in the educational management area. Stakeholder engagement Reach 80,000 schools and 300,000 educators through the Olimpíada da Língua Portuguesa – Escrevendo o Futuro (Portuguese Language Olympics - Writing the Future). The Olimpíada da Língua Portuguesa – Escrevendo o Futuro, organized by Fundação Itaú Social, reached 239,000 educators and 60,000 schools. Promote the use of assessment as a management tool. In partnership with Escola Nacional de Administração Pública (National School of Public Administration – ENAP) of the Federal Government, Fundação Itaú Social trained public servants from seven ministries and special departments in economic assessment of social projects, an important measure to broaden the scope of this methodology. Training of teachers on this methodology, 15 courses on publicizing the methodology (in a number of cities), three regional seminars (Rio de Janeiro, Belo Horizonte and Fortaleza) and one international seminar (São Paulo) were offered. Stakeholder engagement Stakeholder engagement Stakeholder engagement Stakeholder engagement Stakeholder engagement Stakeholder engagement Expand the virtual databases of Instituto Itaú Cultural (Itaú Cultural Institute) through the release of the Film, Music and Dance Encyclopedias and the launch of the institution’s new website, which will strengthen its position as a content portal for Brazilian art and culture. Turn the main technologies developed by Instituto Unibanco into social franchises to be offered to the new state governments as of 2011. Transfer the technology from the Programa Entre Jovens (Among Youths Program - PEJ) to the Rio de Janeiro Municipal Education Department, to be experimentally implemented in 349 municipal schools. Implement, on an experimental basis, the financial education program in public high schools together with the Committee for Regulation and Supervision of Financial Markets, Capital, Insurance,Pension Plans and Capitalization (Coremec)/Pedagogical Support Group, Brazil’s Ministry of Education and the World Bank. Apply the technology for assessing the impact of social projects in all actions of Instituto Unibanco. Instituto Itaú Cultural is conducting the research for the launch of the Film, Dance and Music Encyclopedias. The new website has not been launched due to technology development problems. Instituto Unibanco developed materials for the Transferência (Transference) project and made a contract with the consulting firm that is supporting the process. The technology was applied in schools, but without the transfer of technology (the Transferência project was conceived and scheduled in detail based on the strategy approved by the Board of Trustees and the Management of Instituto Unibanco). In 2010, Instituto Unibanco commissioned an external evaluation, conducted by the Centro de Políticas Públicas e Avaliação da Educação (Center for Public Policy and Evaluation of Education) and participant teachers, as well as the monitoring and reporting on the pilot program by the institute’s technical team. Instituto Unibanco entered into a contract with the service provider to obtain the results of the assessments. 75% Results Achieved Partially achieved Not achieved 6% Total of 37 challenges, 28 of which were achieved, 7 were partially achieved and 2 were not achieved 19% 16 Challenges taken on for 2010 16 Challenges taken on for 2011 Increase Itaú Unibanco’s share in the markets where it operates in South America (Argentina, Chile, Uruguay and Paraguay). Expand the branch network abroad. Increase the corporate segment in foreign markets, mainly focused on small and medium-sized companies. Consolidate the organizational culture. Strengthen the concept of meritocracy within the organization. Migrate 600 branches to the new layout. Implement a systemic evaluation tool for the KYS procedure and increase the number of categories to be evaluated. Follow the schedules for the renovation and maintenance work on the administrative units to increase eco-efficiency practices (reuse of water, use of underground water, and reduction in the consumption of electric energy). Maintain the growth of IBBA. Increase the role of IBBA in the issue of fixed income securities and shares of Latin American companies. Increase the operations of IBBA with corporate clients. Improve the service to ultralarge clients. Implement, at IBBA, the commitments assumed in the Protocolo Verde (Green Protocol). Maintain IBBA’s active participation in the Equator Principles Steering Committee. Train IBBA’s staff to address climate change and develop, in the medium and long terms, mitigation and adaptation instruments and measures, including financing mechanisms. Foster the international expansion of the internal audit area, with the strengthening of external structures in Latin America and review of professional profiles. Utilize forecasting, analysis and statistics tools to support the work of the internal audit area. Increase automation in the internal audit processes. Create a structure to handle the audit of projects, focused on the evaluation of offices and the monitoring of the company’s critical projects. Intensify the systemic evaluation of fraud, money laundering, regulatory and image risks. Increase the coverage of the Sarbanes-Oxley Act in the routine internal audit work. Put a stop to the process of reviewing contracts, which should be presented in simple language. Enhance the litigation management model and strengthen relations with the Public Prosecution Office and the Judiciary. Reduce the filing and the average cost of lawsuits. Complete the renovation of the administrative centers, introducing a new layout concept intended to let staff work in closer proximity, facilitate their processes and speed up decision-making. Develop systems that consume less electric energy and use fewer physical resources, contributing to the optimization of the Data Processing Centers (DPCs). Rethink the application systems, making them more efficient from the standpoint of consumption of machinery and electric energy, as well as use of inputs, such as paper. Double the size of the real estate loan portfolio. Expand the Programa de Certificação Itaú Empresas (Itaú Corporate Certification Program) across the corporate area. Complete the unification of the treasury departments. Advance the implementation of the Fluir Platform (financial process reformulation program). Have a consolidated balance sheet under the International Financial Reporting Standards. Secure a larger market share and more significant results for the bank, keeping the focus on operational efficiency and quality of service to our clients. (Profile 1.1) Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 17 Profile of the organization Profile of the organization 3,967 branches all over Brazil 18 • Profile Geração ofde thevalor organization 22 • Main Liderança em sustentabilidade financial indicators 24 • Operations Um novo banco, umaand nova cultura in Brazil abroad • Principais indicadores We present below the main figures and information of Itaú Unibanco, one of the ten largest banks in the world in market value: Company name: Itaú Unibanco Holding S.A. (Profile 2.1) Direct employees, contracted workers and trainees in December 2010: 108,040 in Brazil and abroad. (Profile 2.8) Head office: São Paulo (State of São Paulo). (Profile 2.4) Total branches and customer site branches in Brazil: On December 31, 2010, our network comprised 3,967 full-service branches throughout Brazil. We also operated 944 CSBs. The range of services provided by the CSBs may be the same as those offered by the full-service branches, or more limited, in accordance with the size of the corporate client and its needs. The CSBs are a lowcost alternative to opening full-service branches. On December 31, 2010, the bank also had 29,311 ATMs available to its clients in Brazil. On the website See the table that shows the 2010 Distribution of Value Added (DVA), where the expenditures with salaries and benefits granted to employees are itemized, with payments made to the government and operational costs, among others. Main brands, products and/or services offered by the company: The most important brands of Itaú Unibanco Holding S.A. or its On the iPad and in the Magazine subsidiaries, which are used in the performance of their activities, are “ITAÚ”, “ITAÚ PERSONNALITÉ”, “ITAÚ BBA”, “ITAUCARD”, “HIPERCARD” and “GARANTEC”. These brands are registered with the National Institute of Industrial Property (Instituto Nacional da Propriedade Industrial), which is the body responsible for registering trademarks and patents in Brazil in the areas of activity in which the organization and its subsidiaries operate. 10 Itaú Unibanco Holding S.A. Relatório Anual de Sustentabilidade 2010 10 Read the notes “A marca mais valiosa do Brasil” (The most valuable brand in Brazil) and “The big bank”, which show important information on Itaú Unibanco’s performance in 2010. Profile of the organization Itaú Unibanco is currently one of the 10 largest banks in the world in market value. We offer a wide range of banking services to a diversified base of individual and corporate clients. These services are provided on an integrated basis by the commercial banking, IBBA and consumer credit segments. Additionally, Itaú Unibanco has a wide range of operations Legal entities Individuals abroad and has strengthened its presence in the international markets based on units that are strategically located in the Americas, Europe and Asia. Accordingly, significant synergy is IBBA annual billing > R$150 million Itaú Private Bank investments ≥ R$2 million e nc ura Ins nd it a red ,C nts me est Inv Itaú Institutional Clients Public Authorities Small and medium sized companies R$500,000 ≤ annual billing ≤ R$150 million Specialized structures offering of more sophisticated financial transactions and private banking operations. (Profile 2.2) Itaú Personnalité income > R$7,000 Date of Itaú Unibanco’s foundation: September 27, 1924. Legal nature: Itaú Unibanco is a publicly-held company Itaú Uniclass R$4,000 ≤ income ≤ R$7,000 Itaú Negócios (individual) annual billing ≤ R$500,000 generated in foreign trade financing, placement of Eurobonds, with shares traded under the ITUB code on three stock Itaú branches Itaú Retail Up to R$4,000 exchanges: São Paulo Stock Exchange (Bolsa de Valores, Mercadorias & Futuros de São Paulo – BM&FBovespa), Buenos Aires Stock Exchange (Bolsa de Comércio de Buenos Aires – BCBA) and NYSE. In these last two markets, trades take place by means of share deposit certificates [American Depositary Receipts on the NYSE and Argentinean Depositary Certificates (Certificados de Depósito Argentinos) on the BCBA]. (Perfil 2.6) The commercial banking segment offers a wide range IBBA is responsible for the provision of services to the of banking services to a diversified base of individuals corporate segment and investment banking activities. Countries and territories where Itaú Unibanco operates: and companies. The services offered by the commercial The management model of IBBA is based on the Brazil, Chile, Uruguay, Paraguay, Argentina, Peru (opening in banking segment include insurance, private pension and establishment of strong relationships with clients by January 2011), United States, Portugal, England, Luxembourg, capitalization products, credit cards, asset management, meeting their needs and offering customized solutions. Japan, China, United Arab Emirates, Bahamas, Spain, France, credit products, and customized products and solutions Services for the corporate segment include the provision Germany, Switzerland, Mexico, Cayman Islands and Hong that are specifically created to meet clients’ demands. The of banking services to large companies, whereas the Kong. (Perfil 2.5) marketing strategies are adapted to the profile of each investment banking activities include the offer of financing client and implemented through the most appropriate to this segment by means of fixed and variable income distribution channels. Our target is to increase the number instruments, among others. The operations of Itaú Unibanco cover more than 1,000 municipalities in Brazil, in addition to branches and offices in 19 countries and two territories (the Cayman Islands and Hong Kong) in the Americas, Europe, Asia and the Middle East. of products used by our clients, thus diversifying the sources of income. This segment is an important source of income The consumer credit segment offers non-account holders for our operations and generates significant financial financial products and services, such as vehicle financing, earnings and service revenue. credit cards and loans to low-income consumers. Profile of the organization 20 Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Main financial indicators Operations in Brazil and abroad 22 24 11 Profile of the organization Main financial indicators (Profile 2.8) Total assets: (R$ billions) Deposits of clients*: (R$ billions) 638.1 2008 608.3 2009 190.8 2009 755.1 2010 206.2 2008 202.7 2010 * Includes demand and time deposits, deposits in savings accounts, interbank deposits and others. Net income: (R$ billions) Stockholders’ equity: 10.0 2008 2008 10.1 2009 Total loan operations with endorsements and sureties: (R$ billions) 271.9 2008 22 Profile of the organization 18 Main financial indicators 22 60.9 2010 Basel Ratio: (%) 16,3 16,7 2009 335.5 2010 50.7 2008 278.4 2009 43.7 2009 13.3 2010 (R$ billions) Operations in Brazil and abroad 24 2010 15,4 Distribution of Value Added* - 2010 (EC1) ROE*: (%) 2,2% 24.8 2008 22.3 2009 30,8% 23.5 2010 36,4% * Recurring Return on Average Stockholders’ Equity (annualized) Efficiency ratio: (%) 30,6% 45,3 2008 2009 42,4 48,8 2010 Employees Interest on capital** Taxes and contributions Interest on third parties’ capital * Refers to the direct economic value generated and distributed by the organization, including revenue, operating costs, employees’ compensation, donations and other community investments, retained earnings and payments to capital providers and governments. ** Includes dividends and interest on capital, retained profits/(losses) for the period and non-controlling interests in retained profits. Free, raised and managed own assets: (R$ billions) 2008 2009 2010 807.7 855.1 1.011.2 (trillion) Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Total distributed: R$ 39.1 billion 23 Profile of the organization Operations in Brazil and abroad (Profile 2.3) (Profile 2.5) (Profile 2.7) (Profile 3.6) We present below, a list of the countries and territories where Itaú Unibanco operates: Countries/Bank Locations 1 Brazil 2 Chile 3 Uruguay 4 Paraguay 5 Argentina 6 US 7 Portugal 8 England 9 Luxembourg 10 Japan 11 China 12 United Arab Emirates 13 Bahamas 14 Spain 15 France 16 Germany 17 Switzerland 18 Mexico São Paulo (head office) Santiago (head office) Montevideo (head office) Asunción (head office) Buenos Aires (head office) New York, Miami Lisbon, Madeira London Luxembourg Tokyo Shanghai Dubai Nassau Madrid Paris Frankfurt Zurich Mexico City US$ million 2010 Territories 1 2 Cayman Islands Hong Kong Georgetown Hong Kong 24 24 Profile of the organization Main financial indicators 18 22 Assets Stockholders’ Equity Foreign branches 54,720 5,809 Itaú Argentina Consolidated 1,406 89 Itaú Europa Consolidated 7,634 838 Cayman Consolidated 9,138 3,813 Chile Consolidated 7,390 849 Uruguay Consolidated 2,144 179 Paraguay 1,369 191 Other companies abroad 1,120 1,013 Foreign Consolidated 77,507 12,779 Operations in Brazil and abroad 24 Operations in the Domestic Market (number of branches and CSBs) North 106 2009: 68 Northeast 301 2009: 242 Midwest 357 Southeast 2009: 282 3.133 2009: 2.499 South 754 2009: 633 Total points = 4,651 Itaú facade branches in Paraguay Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 25 Outlook and strategies Outlook and strategies Fully integrated branches 26 • Outlook and strategies 30 • Vision of sustainability The year 2010 was characterized by the complete integration of the branches of Itaú and Unibanco less than two years after the merger. By October 2010, more than 1,200 banking service centers had already been revamped and carried the Itaú brand, creating a network of nearly 5,000 service units throughout Brazil. In this challenge, which was overcome in the record time of six months, renovation work took place at times in as many as 500 sites simultaneously, involving branches in 25 states (plus the Federal District) in more than 300 cities around Brazil. For 2011, On the website the target is to migrate another 600 Itaú branches to the new service model. See Itaú Unibanco’s Sustainability Policy, by visiting ww2.itau.com.br/ sustentabilidade/_arquivo/politica-desustentabilidade.pdf This accomplishment is the result of the work of each of the 108,000 employees who contributed to the success of this operation. And those who benefited from this were our more than 40 million clients who have been offered a fully integrated and strongly structured network. Besides integrating the service network, Itaú Unibanco On the iPad and in the Magazine also took on the challenge of creating a new relationship In the section “Our concern about climate change”, read the article “De olho na sustentabilidade” (With an eye on sustainability), which addresses the Social and Environmental Risk Policy and the bank’s electronic waste management, in addition to the climate change topic. concept that brought together the strengths of the two companies, adding modernity, transparency and proximity. Today, the focus of everyone in the bank is to increase client satisfaction. For this reason, in 2010, led by the Todos pelo Cliente attitude – the first of the ten listed in Nosso Jeito de Fazer – we trained our employees to promulgate 14 conscientious money practices and implemented the Todos Itaú Unibanco Holding S.A. Relatório Anual de Sustentabilidade 2010 pelo Cliente Award. With all these objectives and practices in mind, putting the client first will increasingly be our priority in all areas of the bank. 14 Outlook and strategies Our commitment is to seek efficiency and quality in everything we do. In 2010, we reduced the number of complaints with the Procon in São Paulo. We also presented a reduction of 58% in total complaints considered valid by the Central Bank in the period from January to November In 2010, we reduced the number of complaints with the Consumer Protection and Advisory Program (PROCON) in São Paulo. our direct relationships with these bodies to promote constructive dialogue in favor of the client. We also opened 31 Itaucard shops aimed exclusively at solving doubts and complaints – after all, we have to know our clients very well to ensure that the relationship between the parties is a long-term one. Above all, we want to supply the right product, to the right consumer, for the right price – and as transparently as possible. The highlight was the small and medium-sized company segment, in which we made good progress and showed better-than-expected results. For the wholesale banking (IBBA) and credit card segments, 2010 was also a very favorable year. (Product Management Approach) management, marketing actions and, in addition, the we analyzed when we thought of ourselves as a brand. financial appraisal of the Itaú brands. beyond the products and services we offer. The market also recognizes all this effort. Despite Market value vs. Ibovespa Index it is important to the people who develop it. Our Our daily challenge has been to think of Itaú Unibanco achievements since the merger are the result of the bank remained on the DJSI, and it is the only bank in as a leading player in the transformation of society, as work of each of the 108,000 people who have made this Latin America that has been included in this index a company embedded in its time, which sees today’s brand what it is today. This is the result of collaborative, for the past 11 consecutive years. On December needs and opportunities and focuses on building a participative and contemporary teamwork that started 31, 2010, our market value was R$179.6 billion, better future. Understanding the scale of this role with the communication of the ten attitudes of “Nosso which represents an increase of 2.57% in relation to enables us to understand the importance of managing Jeito de Fazer”. December 31, 2009. In the same period, the Ibovespa this asset that is our brand. We exist against a backdrop of constant technological and stimulate restless minds, together with an optimistic, whereas the Ibovespa grew 4.5 times. advances, which transform our relationships with the world transparent and personal vision. This has been the and with people, establish non-linear ways of thinking, and challenge for the past two years. Today, our main increasingly highlight the value of intuition and emotion. It objective is to increase client satisfaction. To this end, we is this changing framework that we examine when we ask determined a clear purpose for our brand, which involved ourselves where we actually make a difference. an understanding of who we are, what we believe, what According to Bloomberg1, at the end of December 2010, Itaú Unibanco was in 10th place in the worldwide market value ranking of banks, and this was the second year running that the bank appeared among the world’s ten motivates us and how we deliver. This world establishes new standards of language, Our challenge in the short term – that is, for the next behavior and purpose. Today, we want relationships with We see transformation as a smart way to evolve and ten years – is to become the leading bank in the Latin our clients that go beyond financial transactions; to this promote the evolution of others. Our objective is to convert American market. And, to this end, in addition to being end, we seek partnerships with people whose values challenges into achievements for many because we are in line with our vision and Nosso Jeito de Fazer, we will are similar to ours. If we are clear in our purpose, we will restless and we always think ahead. We seek, persistently, to have to adapt our policies to the countries where we always be able to encourage our clients to make positive be the best and to encourage the best in everyone else. We operate, respecting local cultures. changes in their lives, in the lives of their families and in are part of today’s world and of the world of the future. We society as a whole. use technology to bring us closer to people. Since the merger that created a bank larger than the sum From now on, we will think of Itaú as a brand that is of the two parts, a lot has been done in thinking of Itaú recognized for the transformation it generates in individuals Unibanco as a brand: the spread of a new culture that and society, a legitimate transformation that inspires people reflects the best of the two organizations, a brand with new to find their own voices. Once we understood that we are meanings and qualities, icons and visual identity, which part of a world where priorities change, we established a incorporate elements of the original companies. tone for our brand that reflects our energy, optimism and stakeholders are anchored in sustainability. It was for this reason that the bank became a pioneer in its adherence to the Equator Principles and the Global Compact. Sustainability is also part of Itaú Unibanco’s daily routine when we analyze the financing of projects that have environmental and social impacts or when we create better products and quicker and more flexible processes. For all of this, Itaú Unibanco’s ambition is, daily and increasingly, to be the leader in sustainable performance and client satisfaction. Market value (R$ billions) To bring together the strengths of the two companies our market value grew the equivalent of 8.4 times, Our relationships and business with our many different 107,9 1) International agency that provides information to the financial market. willingness to make things happen, and which brings us We implemented an important tool to monitor the brand closer to people in a simple manner. with respect to the perceptions of image, values, positions and indicators in different business lines. This monitoring We are at the stage of disseminating a new way of tool – called Painel de Marca (Brand Panel) – analyzes the thinking, which reflects our past and incorporates our results of the various surveys conducted over the year and aspirations for the future. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Vision of sustainability A brand is only important to its consumer when its focus on the migration of branches, in 2010, the largest banks. Outlook and strategies represents an important information channel for brand with excellence. Until recently, these were the differences index increased 1.02%. When compared to 2000, In 2010, the bank developed well in all business segments. Ibovespa (1,000 points) Relevance, size, sales, profits, products and services offered Today, we understand that our role as a market leader goes 2010 (in relation to the same period of 2009). In order to improve quality, we have been strengthening Our brand Outlook and strategies Vision of sustainability Long-term plans For Itaú Unibanco, sustainability is the maintenance of business in the short, medium and long terms, aimed at a lasting delivery of value to all stakeholders. This vision implies the structuring of a management model that, together with the striving for performance for stockholders and other stakeholders, also takes into consideration and positively manages the impacts of its operations on the environment and on society. In 2010, Itaú Unibanco matured even further in its understanding of what sustainability means for its business and intensified a process of reflection on and inclusion of the topic in all its areas. This exercise will allow the bank to reach an alignment of the topic across all its operations and processes. Adopting this position represents a major challenge to any organization because it means looking beyond its daily activities and making its products and services satisfactorily meet the needs of its clients, while helping raise awareness and contributing to the fair development of society. To achieve this goal, Itaú Unibanco is supported by clear and welldefined operating strategies, by policies that guide the relationships with stakeholders, by transparency and ethics in business and by accountability. These are in addition to robust corporate governance, where decisions increasingly incorporate the concepts of sustainability. The practices embedded by Itaú Unibanco in the daily routines of its employees are examples of the bank’s concern with learning and incorporating the sustainability agenda and with guiding its operations as a leading institution in the market. Policies, platforms and guidelines – such as Todos pelo Cliente, Uso Consciente do Dinheiro and Critérios Above all, we want to supply the right product, to the right consumer, for the right price – and as transparently as possible. Socioambientais (Social and Environmental Criteria) – are developed with employees and ensure that our management moves increasingly closer to sustainable business practices for clients and society as a whole. The catalysts in this evolution were the consultation with stakeholders, made at the end of 2009, and the constant internal reflection on the development of the topic around the world, the bank’s role in this context and the impact on business. In 2011, one of the main objectives of the bank is to map and systematize management of sustainable practices and identify opportunities for operations to be improved with a focus on sustainable performance. (Sector Management Approach) (Profile 4.17) 30 Outlook and strategies 26 Vision of sustainability 30 Next, we will describe the Sustainability Essence, guidelines that permeate strategy, management and Policy and Governance of Itaú Unibanco. The relationships with stakeholders. The Sustainability Sustainability Essence shows the eight priority Governance institutionalizes the discussions and challenges of the bank to ensure its endurance, decisions on the topic among the leaders of the whereas the Sustainability Policy contains the many areas of the organization. Sustainability Essence To understand the main impacts of our activity and Diversity the challenges to promote sustainable growth it To foster diversity means to build quality relationships is essential for us to put into practice the values, with people of different backgrounds, races, opinions and ideas and principles that guide Itaú Unibanco’s cultures, without discrimination, in a way that understands management. The elaboration of this topic is an their differences and promotes inclusion. ongoing process in which the active participation of all stakeholders is essential. Climate change Climate change is one of the major challenges that After analyzing the main concerns and showing that it is society and our planet face in the pursuit of sustainable open to dialogue, Itaú Unibanco developed its Essência development. We understand that the bank has an da Sustentabilidade, a document that presents, in a clear important role in this sphere in the capacity of a and concise way, the eight main challenges for the bank’s financial institution that has a major impact on the management in the pursuit of a sustainable performance. market and society. These are: (Profile 4.8) Financial education Transparency and governance To develop instruments for people to improve the We believe that transparency strengthens trust in any management of their finances and offer products and relationship. For this reason, we are careful to cultivate, services that meet clients’ needs are ways of respecting our by means of good corporate governance practices, the most important stakeholders. desire to communicate (internally and externally) on a transparent basis. Microfinance Microfinance is an effective tool for the economic and Client satisfaction social inclusion of the underprivileged portions of the Client satisfaction indicates how sensitive we are population. Encouraging the development of this model to the needs of our most important stakeholder and other solutions that help reduce poverty is one of group. To respect and satisfy consumers is the our commitments. way to make this relationship long-lasting and, consequently, ensure we keep their business in the Stakeholder engagement medium and long terms. We work to increase the opportunities for dialogue and interaction with our stakeholders. We want to understand Social and environmental criteria their needs so we can respond with the right products The social and environmental criteria must be applied and services, as well as positive and transparent attitudes, across all our business segments, from financing to while focusing on the development and improvement of investments, and throughout the supply chain. people and companies. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 31 Outlook and strategies Sustainability Policy Executive Sustainability Committee The Sustainability Policy of Itaú Unibanco has three Composed of the members of Itaú Unibanco’s Executive main objectives. The first is to reaffirm the bank’s Committee, it meets every six months to determine its policies commitment to sustainable development. The second and guidelines, in addition to approving the annual planning is to use the concept to constantly review, adapt and proposed by the Sustainability Committee. improve the business in accordance with the guidelines determined. The third is to allow stockholders, Sustainability Committee employees, suppliers, opinion makers and society in Composed of officers, it meets every two months. general to get to know our guidelines and contribute to Its main function is to determine our operations the improvement of our practices. strategy in accordance with the policies and guidelines established by the Executive Sustainability Committee. The Sustainability Policy establishes guidelines for: It also monitors action plans, indicators and targets, • management; supports the development of projects and reflects on • products and services; ways to reach and involve stakeholders in the bank’s • employees; sustainability actions. • relationships with suppliers; • relationships with clients; Sustainability Commission • relationships with society; Composed of superintendents and managers, it meets every • the environment. month and seeks to analyze internal risks and opportunities related to the market, propose projects, solutions and new For Itaú Unibanco’s complete Sustainability Policy, please visit approaches, carry out the action plans determined in the ww2.itau.com.br/sustentabilidade/_arquivos/politica-de- sustainability strategy and spread the culture related to this sustentabilidade.pdf. topic in the bank. Sustainability Governance Dow Jones Sustainability World Index In order to ensure the achievement of targets, as well as to evaluate performance and the adherence of stakeholders Itaú Unibanco was elected for the 11th consecutive year to Itaú Unibanco’s Sustainability Policy, it is necessary to for inclusion in the DJSI portfolio, which is composed of implement a structure aimed at sustainability management shares of companies that have management practices and dissemination of this topic in all areas. For this reason, recognized as sustainable. In the 2010/2011 edition, Itaú the bank has a Sustainability Governance structure that has Unibanco obtained the highest score in the Human Capital approximately 70 executives and managers and is divided Development category. into four authority levels: The new DJSI portfolio comprises 318 companies – only Sustainability Monitoring Committee seven Brazilian – from 27 countries in the Americas, Africa, Composed of members of the Board of Directors, it Asia and Europe. Among these companies are also Redecard works to ensure that the sustainability practices do S.A., a subsidiary of Itaú Unibanco Holding S.A., and Itaúsa – not stray far from our values and principles. It is also Investimentos Itaú S.A. responsible for observing local and foreign standards, trends and discussions related to the topic. This In addition to this important achievement with respect to Committee meets annually. (Profile 4.9) our employees, Itaú Unibanco highlights the fact that it is the only Latin American bank to be included in this index since its creation in 1999. 32 Outlook and strategies 26 Vision of sustainability 32 Climate change Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Fight against money laundering and unlawful acts Banco Nacional de Desenvolvimento Economico e Social (Brazilian Development Bank – BNDES) –Proesco (Energy Efficiency) Emissions Inventory Green IT Principles for Responsible Investments Environmental Insurance Fundo Itaú Excelência Social (Social Excellence Itaú Fund - FIES) IC – Credit line for small companies Program for Employees Instituto Unibanco Estratégia Nacional de Educação Financeira (Unibanco Institute National Strategy for Financial Education) Fundação Itaú Social: Jogo do Uso Consciente (Itaú Social Foundation: Conscious Use Game) Capability of Micro Entrepreneurs Supplier Contracting Policy Pacto pela Erradicação do Trabalho Escravo (Pact for the Eradication of Slave Labor) Crises Management International Finance Corporation (IFC) – Credit lines for carbon projects BNDES Proesco (Forest Financing) Sustainability Report Ethics Management Equator Principles University Loan Personal banking: Credit Guide and Lectures Fundo Itaú Índice de Carbono (Itaú Carbon Index Fund) Environmental Round (Corporations) Corporate Governance Partnership with Organizaçoes da Sociedade Civil de Interesse Público (Oscips - Public Interest Civil Society Organizations) (Emerging Markets Project): Extreme Makeover and Comunidade de Empresas (Corporate Community) Fundo Itaú Ecomudança (Eco Changes Itaú Fund) Projeto Eficiência (Efficiency Project) Transparency and governance Microinvest Microfinance Social and Environmental Risk Policy Eco-efficiency Social and environmental criteria Wealth Management Services (WMS): Education for Investors Uso Consciente do Dinheiro Program Financial education Solucione (Solve It) Consumer Protection Agencies Ombudsman’s Office Todos pelo Cliente Client satisfaction Seguro Mulher (Women’s Insurance) Accessibility Diversity program Diversity AccountAbility 1000 (AA 1000) – corporate responsibility standards Associação dos Analistas e Profissionais de Investimento do Mercado de Capitais (Association of Investment Analysts and Professionals of the Capital Markets – Apimec) meetings Programa Itaú de Finanças Sustentáveis Itaú Sustainability Dialogues Ombudsman’s Office Sustainable Ideas Databank Client Forum Fale Francamente (Speak Frankly) Stakeholder engagement Sustainability incorporated into Itaú Unibanco’s business: 33 Corporate governance Corporate governance Establishing Strategies • Governance structures • Accountability • Risk Management • Crisis Management • Ethics management The corporate governance structure of Itaú Unibanco is responsible for determining strategies, making decisions and monitoring the bank’s relationships with its stockholders, employees and stakeholders, ensuring the lasting creation of value and sustainable development conditions for the institution and society in general. At Itaú Unibanco, governance is supported by the work of five committees: Audit, People, Appointment and Corporate Governance, Risk and Capital Management and Strategy. These five committees report to the Board of Directors, which is responsible for the election or appointment of their members. The promotion of ethics and transparency is indispensable for the success of this continuous management improvement On the website Learn more about our risk management process and the principles of our Code of Ethics. process. For this reason, we have independent members in the Board of Directors and in our many committees. For more information on Itaú Unibanco’s corporate governance policies and practices and to see the qualifications of the members of the highest governance body of the company, please visit www.itau-unibanco.com.br/ri. (Profile 4.7) On the iPad and in the Magazine Refer to the note “Vitória da Transparência” (The Victory of Transparency), about the recognition as the most transparent company on the Ibovespa received by Itaú Unibanco in 2010. Corporate governance Corporate Structure on 12/31/2010 (Profile 2.8) Egydio de Souza Aranha Family Moreira Salles Family The appreciation of ethics and transparency is indispensable for the success of this continuous management improvement process. Governance structures (Profile 4.1 and 4.2) (*) Excluding Controlling Stockholders and Treasury Shares Average traded volume (BM&FBovespa + NYSE) Management of Itaú Unibanco Holding S.A. Breakdown of Preferred Shares on 12/31/2010 (R$ millions) Stockholders’ General Meeting 16.28% Fiscal Council 874 641 Board of Directors 242 650 559 8.38% 189 319 185 95 79 106 224 2005 2006 207 191 632 452 2007 NYSE (ADR) 20.38% 368 2008 2009 Audit Committee 443 Appointment and Corporate Governance Committee Internal Audit BM&FBovespa (ON+PN) Foreigners on the NYSE Independent Audit Executive Board Foreigners on the BM&FBovespa Disclosure and Trading Committee Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Accountability Risk and Capital Management Committee 2010 Brazilians on the BM&FBovespa Governance structures People Committee Risk Management Crisis Management Ethics management Strategy Committee International Advisory Board Corporate governance Board of Directors Composition of the Board of Directors (Profile 4.3) A joint committee composed of 13 members, three of Chairman whom are independent professionals, which is responsible Pedro Moreira Salles for determining the business strategies and management in the efforts toward solid and sustainable growth. Among Vice-Chairmen the other functions of the Board of Directors are: selecting Alfredo Egydio Arruda Villela Filho the members of the committees, electing and dismissing Roberto Egydio Setubal members of the Executive Board, determining their Directors functions and supervising their work. Alcides Lopes Tápias (independent) Alfredo Egydio Setubal Candido Botelho Bracher Itaú Unibanco’s Board of Directors is a joint-committee comprising 13 members; three of them are independent professionals. 38 Governance structures 38 Fernando Roberto Moreira Salles Francisco Eduardo de Almeida Pinto Gustavo Jorge Laboissiere Loyola (independent) Henri Penchas Israel Vainboim Pedro Luiz Bodin de Moraes (independent) Ricardo Villela Marino Accountability Risk Management Crisis Management Ethics management 42 43 52 53 Executive Committees Retail Banking - Individuals Itaú Unibanco has two executive committees, which Geraldo José Carbone are responsible for managing and representing the institution. The Executive Committee of Itaú Unibanco S.A. is responsible for all operations, except for those of the wholesale banking segment, which are the responsibility Corporate Pension, Capitalization, Institutional Relations and Marketing José Castro Araújo Rudge of Itaú BBA’s Executive Committee. In 2010, Alexandre de Consumer Credit Barros, Executive Vice-President for Technology, joined Itaú Márcio de Andrade Schettini Unibanco’s Executive Committee and Antonio Carlos de Oliveira left his office as Executive Vice-President after 40 Itaucred - Vehicles, Real Estate Loans and Consortium years with the bank. Marco Ambrogio Crespi Bonomi Composition of the Executive Committee of Itaú Unibanco S.A.* Corporate Banking Ruy Villela Moraes Abreu Chairman Risks and Finance Roberto Egydio Setubal Sérgio Ribeiro da Costa Werlang Technology Operational Risk, Efficiency and Compliance Alexandre de Barros Marcos de Barros Lisboa Wealth Management & Services People and External Units Alfredo Egydio Setubal Ricardo Villela Marino * In early 2011 there were changes on the Executive Committee. The new structure can be found on www.itau-unibanco.com.br/ri Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 39 Corporate governance Composition of the Executive Committee of Itaú BBA Audit Committee Chairman The Audit Committee is responsible for the quality and Candido Botelho Bracher integrity of our financial statements, the compliance with legal requirements and regulations, and the quality of the Vice-Chairmen internal and the independent audit and risk management Commercial and Products control systems. Alberto Fernandes Composition of the Audit Committee Institutional Treasury Chairman Daniel Luiz Gleizer Gustavo Jorge Laboissiere Loyola Investment Banking Members Jean-Marc Robert Nogueira Baptista Etlin Alcides Lopes Tápias Alkimar Ribeiro Moura 40 Retail Operations and Business Eduardo Augusto de Almeida Guimarães Rodolfo Henrique Fischer Guy Almeida de Andrade Governance structures 40 Accountability Risk Management Crisis Management Ethics management 42 43 52 53 Personnel Committee Composition of the Risk and Capital Management Committee* The Personnel Committee guides the development of staff Members and retention of talent, in addition to setting guidelines for Candido Botelho Bracher recruitment, evaluation and career planning policies. It is also Francisco Eduardo de Almeida Pinto responsible for analyzing and approving the compensation Gustavo Jorge Laboissiere Loyola packages proposed for officers. Pedro Luiz Bodin de Moraes Roberto Egydio Setubal Composition of the Personnel Committee Chairman Strategy Committee Pedro Moreira Salles The main function of the Itaú Unibanco Strategy Committee is to discuss and analyze topics that might have an impact on the bank’s businesses. The members Members are elected annually and their task is to assist the Board of Directors in setting Candido Botelho Bracher business-related strategic guidelines. Francisco Eduardo de Almeida Pinto Ricardo Villela Marino Composition of the Strategy Committee* Roberto Egydio Setubal Members Henri Penchas Appointment and Corporate Governance Committee Israel Vainboim One of the main objectives of the Appointment and Corporate Pedro Moreira Salles Governance Committee is to monitor the governance of the Ricardo Villela Marino bank, particularly in matters related to the Board of Directors. Roberto Egydio Setubal This Committee is also responsible for helping the Chairman of the Board make decisions on the appointment of the members International Advisory Board of the Board of Directors. The objective of the International Advisory Board, chaired by former Minister of Finance Pedro Malan, is to help expand our presence in the international financial Composition of the Appointment and Corporate Governance Committee* community, as we consolidate our position as the largest and best national private bank in Brazil. Members Alfredo Egydio Arruda Villela Filho Composition of the International Advisory Board Alfredo Egydio Setubal Chairman Fernando Roberto Moreira Salles Pedro Sampaio Malan Henri Penchas Israel Vainboim Members Pedro Moreira Salles André Lara Rezende Carlos Ghosn Risk and Capital Management Committee Jacob A. Frenkel The Risk and Capital Management Committee monitors and Marcel Telles reviews policies and helps determine the institution’s general Pedro Aspe conduct when facing market, finance, credit, liquidity, legal, image Raghuram Rajan and operational risks. Pedro Moreira Salles Ricardo Villela Marino Woods Staton * At the beginning of 2011, there were changes in the Executive Committee. The new structure can be seen on the website www.itau-unibanco.com.br/ri. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 41 Corporate governance Accountability Ethics and transparency Itaú Unibanco is one of the largest banks in the world, In 2010, through Itaú Asset Management, we also with a market value of over R$179.6 billion at the end consolidated our voluntary adherence to the Principles of 2010 and shares traded on three stock markets for Responsible Investment (PRI), a UN initiative – BM&FBovespa, BCBA and NYSE. Because of this, designed to guide the financial and capital markets in accountability, based upon ethical and transparent the pursuit of sustainable development and integration values and principles, is one of the priorities for our of environmental, social and governance topics in the management. management of organizations. Developed in 2005, the PRI today has over 730 signatories worldwide. In its history, Itaú Unibanco has incorporated monitoring and accountability instruments that are internationally The organization is also fully active in terms of recognized, such as the Global Compact, the Equator accountability, providing public information that is Principles, the GRI guidelines, the United Nations clear, transparent and timely. In 2010, we held 22 Environment Programme Finance Initiative, the Carbon Apimec meetings with more than 2,500 participants Disclosure Project, the GHG Protocol Initiative and the in Brazil, in addition to 19 meetings abroad. These AA 1000 standard. Among the Brazilian initiatives, we meetings represent an important communication are signatories of the Pact for Eradicating Slave Labor channel for local and foreign investors to better and the Green Protocol. Our business practices are in understand the practices, policies and strategies compliance with the code of ethics of the financial sector behind the bank’s investment decisions. and are aligned with the trends indicated by the DJSI and the São Paulo Stock Exchange ISE, on which we have been included since their creation, among other market recognition. (Profile 4.12) The promotion of ethics and transparency is indispensable for the success of this continuous management improvement process. In essence Transparency and governance… ...are requirements for responsible corporate work. Our Board of Directors has three independent professionals and we have been present, for 11 consecutive years, in the Dow Jones Sustainability World Index of the New York Stock Exchange. 42 Governance structures Accountability Risk Management 36 30 42 43 Crisis Management Ethics management 52 53 Risk management Optimizing opportunities Risk management is considered by Itaú Unibanco an essential instrument for maximizing the use of capital and selecting the In essence best business opportunities, with a view to achieving the best Social and environmental criteria risk-return ratio for our stockholders. Main risk categories Market Risk – possibility of losses resulting from fluctuations in the market value of the positions held by a financial institution, as well as its financial margins, including the risks of transactions subject to variations in the foreign exchange rate, interest rates, and share and commodity prices. The treatment given to market risk is described in a specific circular. Credit Risk – possibility of losses related to non- In order to integrate sustainability into the business, we always seek to enhance the social and environmental criteria we use. In addition to subscribing to the Equator Principles and the Principles for Responsible Investment (PRI), we take social and environmental requirements into consideration in all our business - from financing to investments. compliance by the borrower or counterparty with its financial obligations under the agreed-upon terms, leading to the depreciation of a loan agreement due to the downgrading of the borrower’s risk rating, to lower gains or Risk management process remuneration, to benefits granted in a renegotiation and to Risk management at Itaú Unibanco is a process in recovery costs. which: (Profile 4.11) Liquidity Risk – possibility of imbalances between tradable • the existing and potential risks of a transaction are assets and liabilities falling due – “mismatches” between identified; payments and receipts – that may affect the institution’s payment capability, taking into consideration the different currencies, settlement terms, rights and obligations. Operational Risk – possibility of losses resulting from • the risk limits are established, in compliance with all business strategies of the bank; • policies, procedures and methodologies that are failure, deficiency or inadequacy of internal processes, consistent with the previously established risk limits are people, systems or external events. It includes the legal risk approved; associated with inadequacy or deficiency in contracts signed by the institution, as well as sanctions for non-compliance with legal provisions and compensation for damages to third • the risk portfolio of the bank is managed in relation to the best risk-return ratios; parties arising from the activities of the institution. • the allocation of capital is consistent with the risks Underwriting Risk – risk arising from an adverse economic incurred. situation that goes against the expectations of the insurance company at the time of preparation of its underwriting policy regarding the uncertainties existing when provisions are estimated. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 43 Corporate governance This process permeates the whole institution, whose This structure is responsible for monitoring compliance senior management, by means of committees, with the regulations required by the leading institution determines the global objectives that are passed on of the conglomerate. Therefore, Itaú Unibanco manages as targets and limits to the business units that manage proprietary IT systems to fully comply with the capital reserve the risks. The control units, in turn, provide feedback to requirements related to risks of fixed rate operations and the senior management, reporting the results of the exposure to foreign currencies, according to measurements consolidated risk monitoring. and models of the Central Bank of Brazil (BACEN). It also coordinates actions for verifying adherence to the qualitative and quantitative requirements established by the proper authorities for observing the minimum capital requirements. Global Targets and Risk Limits The consolidation of the portfolios is already a mature approach to credit and market risk, whereas for operational Allocations Based on Risk-Return risks, work is being developed for the same purpose. The Consolidation modeling of the operational risk, which poses difficulties Business Units Transactions given the multidisciplinary nature of the risk and short amount of time it has been observed and considered, is an area in which the institution has made significant progress, allowing increased accuracy in the allocation of capital for Risk Information covering this kind of risk. The objective of centralized control is to provide the bank’s senior management with a global view of the conglomerate’s exposure to risks so as to optimize and Centralized control speed up corporate decisions. The Market, Credit, Liquidity, Operational and Underwriting risk control structure is centralized at Itaú In order to centralize the monitoring, we structured the Unibanco in order to ensure that all different control areas aimed at the consolidated management of credit, units of the conglomerate follow the established market, liquidity, operational and underwriting risks. Our policies and procedures. The identification, aggregation aims were to make the concepts used in risk management and monitoring of risks are carried out in such a way consistent and provide information for monitoring risk in to provide the necessary information to the four above the many different units. mentioned commissions of the senior management. To learn more about Itaú Unibanco’s risk management, please visit www.itau-unibanco.com.br/ri. The identification of risks aims at mapping out the internal or external risk events that might affect the strategies of the business and support units and the accomplishment of their goals and possibly impact allocated capital and results. 44 Governance structures Accountability 36 30 42 Risk Management 44 Crisis Management Ethics management 52 53 Our Social and Environmental Risk Policy for Corporate Credit was developed based on internationally acknowledged policies and principles, such as the Equator Principles. Social and environmental risk recognized policies and principles such as the Equator Principles. On its launch in 2007, it was submitted to our stakeholders for Financing for sustainable development external consultation, with the international standard AA 1000 as The analysis of the social and environmental risk underpins a reference. our management and is a strategic tool for integrating sustainability with business. When analyzing the management Medium-sized company segment practices of its clients with regard to their impacts and risks In the medium-sized company segment served by Itaú Unibanco, for society and the environment, Itaú Unibanco seeks to foster clients are classified according to their potential social and sustainable development and improve its risk profile. environmental risk – High (A), Medium (B) or Low (C). Companies with an A or B social and environmental classification that are involved There are two main tools that guide the social and in loans equal to or higher than R$5 million undergo a social and environmental risk analysis at the conglomerate: the Social environmental risk analysis and can receive favorable or unfavorable and Environmental Risk Policy for Corporate Credit and the opinions. All opinions issued have an expiration date and are Equator Principles. monitored by the bank according to pre-established standards. In addition to the classification of projects as High (A), Medium (B) and The Social and Environmental Risk Policy for Corporate Low (C) risk, the Banned List and the Restricted List are also consulted. Credit outlines criteria and establishes tools that integrate The Banned List describes the activities or practices of companies with social and environmental issues with the process of granting which the bank does not wish to have a relationship, such as those on corporate credit. It was developed based on internationally the Black List issued by the Ministry of Labor and Employment. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 45 Corporate governance Social and environmental opinions issued by Itaú Unibanco in 2010 for the medium-sized company segment (FS11) Social and environmental classification Favorable social and environmental opinion A 1,161 Unfavorable social and environmental opinion 20 Practice changes 8 B 1,351 23 7 Total 2,512 43 15 Large-sized company segment In the large-sized company segment served by Itaú BBA, the Unibanco’s Social and Environmental Risk Policy, social and environmental risk analysis covers the analysis of based on the profile of IBBA clients. risks and impacts, in addition to the evaluation of the social and environmental management capability of both projects In 2010, 16 corporate finance projects were and economic groups. analyzed and contracted based on the criteria and tools set by the Social and Environmental The Internal Procedures Handbook was prepared in order Risk Policy, representing a total investment of to help in the implementation of the guidelines of Itaú R$5.2 billion. Corporate finance projects contracted (under the Social and Environmental criteria)1 in 2010 (FS11) Number of projects contracted Total investment (in millions of reais) Itaú BBA’s share (in millions of reais) Classification2 of the corporate finance projects B+ 12 4,835.6 1,215.8 C 4 365.1 174.2 Retail 4 365.1 174.2 Sugar and ethanol 2 2,925.0 690.0 Electric energy 9 1,689.5 401.9 Chemical industry 1 221.1 123.9 Southern Brazil 2 343,691.0 45.2 Southeastern Brazil 6 1,298,101.0 434.9 Midwestern Brazil 3 3,067.0 700.6 Northeastern Brazil 1 126.8 35.0 Brazil 4 365.1 174.2 16 5,200.73 1,390.01 Industry of the corporate finance projects Location of the corporate finance projects 3 Total corporate finance projects contracted Total Notes: 1 – Social and Environmental Policy for Corporate Credit. 2 – Classification of the social and environmental risk of projects according to the Social and Environmental Risk Policy for Corporate Credit. 3 – Projects implemented in more than one region of Brazil (e.g. horizontal integration). N.B.: unlike the project finance operations, the corporate finance projects are not usually approved by a credit committee as specific operations; they fall into existing limits. 46 Governance structures Accountability 36 30 42 Risk Management 46 Crisis Management Ethics management 52 53 In addition to the long-term financing analysis for corporate finance and project finance loans, IBBA analyzes products related to structured projects under the Social and Environmental Risk Policy criteria. We present below the figures related to the analysis made for bridge loans and guarantees for structured projects. Other operations related to project finance contracted in 2010 Bridge loan1 Guarantee2 Total Number of operations contracted Number of operations 2 4 6 Total investment (in millions of reais)3 1,808.6 4,347.0 6,155.6 Itaú BBA’s share (in millions of reais) 223.1 571.5 794.6 A+ 1 3 4 B+ 1 1 2 Northeastern Brazil 0 2 2 Southeastern Brazil 2 1 3 Brazil5 0 1 1 Amounts of the operations contracted Classification of the operations contracted 4 Location of the operations contracted Notes: 1 - Bridge loans for project finance. 2 – Guarantees for structured projects. 3 – If the amount is reported in a different currency, the exchange rate of the date of the contract was used. 4 – Classification of the social and environmental risk of the project according to the Social and Environmental Risk Policy for Corporate Credit. 5 – Projects implemented in more than one region of Brazil (e.g.: horizontal integration). Other operations related to financing projects approved by IBBA but not contracted1 in 2010 Bridge loan2 Guarantee3 Total Number of operations approved (not yet contracted) Number of projects 5 2 7 1,093.0 255.0 1,348.0 Amounts of operations approved (not yet contracted) Volume approved of IBBA’s share (in millions of reais) Location of operations approved (not yet contracted) Northeastern Brazil 2 1 3 Southeastern Brazil 2 1 3 Southern Brazil 1 0 1 Notes: 1 – Contracting did not take place in 2010 for a number of different reasons. 2 – Bridge loans for project finance. 3 – Guarantees for structured projects. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 47 Corporate governance Project finance The social and environmental risk analysis for granting credit under project finance is based on the verification of the client’s compliance with the criteria set by the Equator Principles. In 2004, Itaú and Unibanco were the first two banks from emerging markets to adopt the Equator Principles. Equator Principles Created in 2003, the Equator Principles, to which • Land acquisition and involuntary resettlement; adherence is voluntary, consist of a set of social and environmental criteria and guidelines that must be • Sustainable natural resource and biodiversity observed by the signatory banks when identifying and management; evaluating the risks and impacts in project finance operations. These Principles use the Performance • Impacts on indigenous peoples and their culture, Standards (http://www.ifc.org/ifcext/sustainability.nsf/ traditions and values; Content/PerformanceStandards) and the Environment, Health and Safety Guidelines (http://www.ifc.org/ifcext/ • Protection of cultural and archeological heritage. sustainability.nsf/Content/EnvironmentalGuidelines) of In 2004, Itaú and Unibanco were the first two banks from the IFC as parameters. emerging markets to adopt these standards. Between The main aspects to be considered by the signatories of the September 2008 and March 2010, Itaú Unibanco chaired Equator Principles when granting credit for project finance are the Equator Principles Steering Committee, a landmark for those defined by the IFC’s Performance Standards, namely: the dissemination of good practices in emerging countries, particularly in Latin America. • Social and environmental management system; For 2011, the bank’s challenge is to maintain its active participation in the Equator Principles Steering Committee, • Labor and working conditions; in addition to contributing to the strategic review of the • Pollution prevention and reduction, minimization of waste Equator Principles and the IFC’s Performance Standards. The and management of solid and chemical waste; bank also intends to increase its capability to address the climate change topic by development, in the medium and • Protection of human rights and of community health and long terms, of mitigation and adaptation instruments and safety; measures – including financing mechanisms. 48 Governance structures Accountability 36 30 42 Risk Management 48 Crisis Management Ethics management 52 53 We present below the figures that reflect the social and environmental risk analyses made for project finance in 2010: Project finance1 contracted (under the Equator Principles criteria) in 2010 (FS11) Number of projects contracted Total investment (in millions of reais) Itaú BBA’s share (in millions of reais) Classification2 of project finance B 2 242.7 90.5 Electric energy 1 37.5 10.5 Sanitation 1 205.2 80.0 Southeastern Brazil 1 205.2 80.0 Northern Brazil 1 37.5 10.5 2 242.7 90.5 Industry of project finance contracted Location of project finance contracted Total project finance contracted Total Notes: 1 – Project finance as defined by the Basel Accord at http://www.bis.org/publ/bcbs107.pdf 2 – See Principle 1, available at http://www.equator-principles.com/resources/equator_principles.pdf Project finance1 approved by Itaú BBA, but not yet contracted2 (under the Equator Principles criteria) in 2010 (FS11) Number of projects approved and not yet contracted Volume approved of IBBA’s share (in millions of reais)3 Industry of project finance approved (not yet contracted) Electric energy 3 380.0 Mining 1 73.2 Agribusiness 1 418.0 Location of project finance approved (not yet contracted) Northeastern Brazil 4 453.2 Northern Brazil 1 418.0 5 871.2 Total project finance contracted (not yet contracted) Total Notes: 1 – Project finance as defined by the Basel Accord at http://www.bis.org/publ/bcbs107.pdf 2 – Contracting did not take place in 2010 for a number of different reasons. 3 – If the amount is reported in a different currency, the exchange rate of the date of the most recent approval by a committee was used. N.B.: the final classification of the project will be made until the date of the contract (see Principle 1, available at http://www.equator-principles.com/resources/equator_principles.pdf ). Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 49 Corporate governance The social and environmental analysis of IBBA may result in the refusal of the project finance based Loan, leasing and other credit operations on its risks and impacts. In 2010, one project was PUBLIC SECTOR Electric energy generation, transmission and distribution Chemical and petrochemical Other PRIVATE SECTOR CORPORATIONS INDUSTRY AND COMMERCE Food and beverages Auto parts and accessories Agricultural capital goods Industrial capital goods Pulp and paper Fuel distribution Electric and electronic products Pharmaceutical Fertilizers, insecticides and pesticides Tobacco Import and export Medical and hospital materials and equipment Construction materials Metallurgy and iron and steel Furniture and wood Chemical and petrochemical Supermarkets Light and heavy vehicles Clothing Other/Commerce Other/Industry SERVICES Civil construction (contractors) Finance Electric energy generation, transmission and distribution Holding Real Estate Media Service providers Health Telecommunications Transportation Other services PRIMARY SECTOR Agroindustry Mining OTHER/CORPORATIONS INDIVIDUALS Credit cards Consumer credit /Current accounts Real estate loans Vehicles GRAND TOTAL In thousands of reais 1,165,860 % 0.4 turned down. 565,373 0.2 272,565 327,922 295,936,026 161,918,219 85,113,228 14,344,592 3,867,481 847,518 5,172,365 2,361,801 1,893,279 6,945,799 2,098,890 1,313,974 373,160 1,996,909 918,736 4,398,567 6,876,259 2,710,836 5,330,789 1,088,887 5,942,477 7,682,679 4,940,944 4,007,286 60,313,047 3,317,358 5,331,036 5,216,304 3,037,021 9,568,362 2,697,881 4,487,883 1,953,773 1,058,677 11,931,044 11,713,708 13,948,391 11,742,958 2,205,433 2,535,553 134,017,807 35,545,508 27,557,658 10,790,484 60,124,157 297,101,886 0.1 0.1 99.6 54.5 28.6 4.8 1.3 0.3 1.7 0.8 0.6 2.3 0.7 0.4 0.1 0.7 0.3 1.5 2.3 0.9 1.8 0.4 2.0 2.6 1.7 1.3 20.3 1.1 1.8 1.8 1.0 3.2 0.9 1.5 0.7 0.4 4.0 3.9 4.7 4.0 0.7 0.9 45.0 12.0 9.3 3.6 20.2 100.0 To learn more about the social and environmental risk analysis of the real estate loan, vehicle financing and insurance segments, see their respective chapters. Loan portfolio classification Itaú Unibanco operates in multiple business lines from different segments of the economy. The loan portfolio represented 39.3% of total assets in December 2010; on that date, the reference equity required for loan operations was 93.2%, which shows that personal loans and corporate credit are the bank’s main products. (FS6) Staff training Also in 2010, IBBA offered an e-learning training course on Entendendo o que é Risco Socioambiental (Understanding what Social and Environmental Risk Is) to the entire commercial area and employees from the back office areas that are involved in the social and environmental risk assessment process. An in-person training course was also provided to the employees of Itaú Europa. (FS4) Stakeholder engagement The objective of the relationships Itaú Unibanco maintains with certain clients and companies in which it holds an investment or of which it is a partner is to disseminate knowledge about social and environmental risk management issues. The interactions take place via announcements, newsletters, in-person meetings, visits, calls and independent consultations, among others, depending on the activity developed by each stakeholder and their geographic location. The social and environmental evaluation and risk management practices related to project finance operations carried out by Itaú BBA, as well as their international circulation, are essential for establishing partnerships, particularly with clients and other financial institutions. In this regard, the bank has 50 Governance structures Accountability 36 30 42 Risk Management 50 Crisis Management Ethics management 52 53 worked together with these stakeholders to develop criteria and guidelines based on international social and environmental management standards, which will be subsequently applied to projects developed by companies, many of which are IBBA clients. In 2010, we highlight the active participation in the strategic review of the Equator Principles, which was coordinated by the Steering Committee of these Principles; the review of the IFC’s Performance Standards, which was coordinated by the IFC itself; and the Advisory Group Meeting of the Business and Biodiversity Offsets Programme (BBOP), organized by BBOP to discuss the best practices in biodiversity offsets. (FS5 and FS10) Social and environmental audit We have an internal audit department for evaluating the implementation of social and environmental policies that reports directly to Itaú Unibanco’s Board of Directors and is technically supervised by the Audit Committee. The department operates in all the companies and all the processes of the conglomerate. Regular evaluations of the Social and Environmental Risk Policy for Corporate Credit are performed by testing the effectiveness of compliance with the policy. As for project financing, compliance with the Equator Principles is also evaluated. The results of these evaluations are reported to the executive officers, the Audit Committee and the Sustainability Committee. The Sustainability Policy is also regularly evaluated and the results are reported to the executive officers and forwarded to the CEO, the Audit Committee and the Chairman of the Board of Directors. The evaluation of the social and environmental risks is taken into consideration for audits performed in Brazil and in the foreign units. The internal audit department of Itaú Unibanco uses the international auditing standards of the Institute of Internal Auditors. (FS9) (Sector Management Approach) Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report We invest constantly in the training of our employees from the commercial, products and corporate credit areas in order to improve our Social and Environmental Risk Policy. 51 Corporate governance Crisis management Taking care of business and reputation The year 2010 was also characterized by the expansion of the Itaú Unibanco’s Corporate Crisis Management Program Corporate Crisis Management Program in the bank’s Brazilian is continuously improved through the joint efforts of all and foreign operations, a process that began in 2009. In Brazil, departments. It is an important tool for the company’s business 167 interviews were conducted aimed at recycling the program. sustainability and reputation management, and it has been In addition, 60 new focus agents were appointed, representing proven effective with each passing day. a growth of 43% in relation to the number of agents in 2009. Abroad, the program was implemented in six new units, located Thanks to the business continuity plan, which is part of the in Uruguay, Japan and the United States, with the appointment program’s strategy, the bank managed to keep 95% of its of 26 new focus agents (an increase of 21%). business in Chile up and running during the emergency situation caused by an earthquake in that country in Evolution of the Corporate Crisis Management Program in 2010: February 2010. • Expansion to social networks on the Internet, aiming at The Corporate Crisis Management Program is based on a • Distribution of an Orientation and Awareness Guidebook managing the bank’s reputation; multidisciplinary management model designed to coordinate to the Retail Network, which reached 3,000 employees at quick response actions to any crisis, avoiding human and/ the bank’s branches (including the Uniclass Itaú and Itaú or financial losses and any harm to the bank’s reputation. Its operation is structured on three levels (strategic, tactical and operational) and it is supported by the Crisis Management Personnalité segments); • Distribution of safety guidebooks to 15 new administrative centers; • Unification of the emergency department; Policy, which covers the entire conglomerate. • Qualification of 56 new centers of the bank; Focus agents are responsible for the program’s success. They are representatives appointed to work on resolving crises, assisting • Expansion of the program’s database to support the team’s knowledge and the development of crisis plans. in the resumption of business, monitoring problems and improving processes with a focus on prevention. The Corporate Crisis Management Program is based on a multidisciplinary management model designed to coordinate quick responses to any crisis, avoiding human and/or financial losses and any harm to the bank’s reputation. 52 52 Governance structures Accountability Risk Management 36 30 42 43 Crisis Management Ethics management 52 53 To monitor trends and current demands related to ethics, in 2010 we improved the Policy of Ethics and Combating Corruption and Bribery, which establishes guidelines that complement the Code of Ethics. Ethics management Responsible leadership Itaú Unibanco conducts business in an ethical and the values that should be put in place to resolve dilemmas, responsible way. Accordingly, we ensure solid growth and conflicts of interests and legal issues. (Profile 4.8) leadership based on values and principles shared by all of our employees. To monitor trends and current requirements related to ethics, in 2010, we improved the Policy of Ethics and Combating Corruption One of the main instruments for achieving this goal was the and Bribery, which establishes guidelines that complement the consolidation of the Itaú Unibanco Code of Ethics, which was Code of Ethics. (Society Management Approach) launched in February 2010 and distributed to all employees in Brazil and abroad. Its dissemination was supported by To disseminate and ensure compliance with this set of various communication actions. guidelines in the organization’s culture, Itaú Unibanco has an Ethics Program that consists of the modules described Our Code of Ethics was developed based on four major in the table below. The management of this program is the principles: Identity, Good Faith, Interdependency and responsibility of Itaú Unibanco’s ethics and conduct joint Excellence. This structure allows for a broader reflection on committees. In 2010, 41 meetings were held. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 53 Business Business Growth in Brazil and abroad • Commercial Banking • Itaú BBA • Consumer credit • Insurance, private pension and capitalization • Business abroad The year 2010 was characterized by the full integration of the activities of Itaú Unibanco. We reached the end of the year with the certainty that the bank is now in a position to take advantage of the growth opportunities that the Brazilian and foreign markets have to offer and totally focus on satisfying the needs of clients from all segments. The most visible sign of this, and the one that symbolized the completion of this movement, was the integration of all the branches. Just 720 days after the announcement of the merger between Itaú and Unibanco, an unprecedented operation in the history of the Brazilian financial industry, we were able to complete the migration of the entire network, in record time, to start offering clients a new concept of space and relationships. On the website Access the “Overhauled Appearance” box to get to know all the details of the new layout of the Itaú Unibanco branches. Even though a major effort was concentrated on structuring this new bank, it is noteworthy that we were able to keep pace with the growth of the Brazilian market. And, in some segments, there were gains in market share greater than those of the competition - notably in vehicle financing, an operation in which we are leaders in Brazil and which maintained its successful track record in 2010. Itaú Unibanco holds a third of the financing market in Brazil, which accounts for 55% of the bank’s total personal loans. We are the world’s second largest operation by volume in the banking sector. This is the result of investments in after-sale services, which takes 1 million calls per month, and 60% of these are successfully handled electronically. On the iPad and in the Magazine Read in the section “Integrados e Prontos Para Crescer” (Integrated and Ready to Grow), the article that addresses how the merger between Itaú and Unibanco impacts the day-to-day activities of many stakeholders involved in this process. See also how the life of a seamstress from Rio de Janeiro changed for the better with the aid of microcredit. Business Commercial banking Itaú Unibanco is also among the ten largest credit card of the above mentioned risks are controllable or not. For operators in the world, administering 56 million active the controllable risks, the organization should evaluate credit cards. In Brazil, credit cards have become the whether it should accept or minimize them, through the Serving different stakeholders companies involved and over 1,600 people working just in primary banking instrument for individuals, requiring implementation of controls. As for those that cannot be The commercial banking segment offers a wide range logistics and transportation. special attention by the bank in order to encourage controlled, the organization must decide whether to reduce of banking services to a diversified base of individuals their conscientious use. the level of business activity or to accept them, proposing and companies. The services offered by this area include During this period, communication with account holders another possible solution that mitigates the indicated risks. insurance, (private) pension and capitalization products, was intense. Detailed information about new current In foreign operations, which represent 10% of our In all stages of the product flow, outsourcing processes credit cards, asset management, credit products and account data, passwords, products and service channels earnings, we have also made significant progress. In are evaluated by the areas involved, for the purposes of customized products and solutions designed specifically to were sent at least one month prior to the change. Latin America, our growth focus was in retail activities, identifying the risks and impacts for clients. meet the demands of clients. During the process, over 420,000 volumes were transported, in which we have grown above the market average in all countries where we operate, driven by the positive The scope of application of the above mentioned policy Retail banking totaling around 1.1 million items delivered (26,000 chairs economic climate in the region. The performance of involves product and services development throughout The new Itaú Unibanco branch model is the result of a and 11,700 tables, 6,000 counters, 1,600 lighted logos, 8,000 Itaú Unibanco abroad has progressed significantly on the entire holding company. The policy and its guidelines number of surveys conducted with clients, consumers and façade stars, 81,000 square meters of carpeting and 97,000 several fronts. We support the business of Brazilian are published on the intranet so that they can be accessed opinion makers. The result of this was the concept that square meters of flooring). companies abroad, which require different types of by employees. Ensuring the implementation of this the sum of the parts produced something greater than services, such as credit and advisory on acquisitions, policy is a responsibility of the Efficiency, Quality and each individual part, translated into the campaign “1 + 1 We ended 2010 with 3,967 branches, 944 CSBs and 29,311 imports and exports, in addition to fundraising to Ombudsman’s Office. > 2”. It is greater because we deliver a new type of service ATMs throughout Brazil. to our more than 40 million clients. We created an entirely finance local development. This internationalization of Brazilian companies, coupled with the desire of A monitoring control is being implemented, in which there new relationship structure, which reflects the qualities Itaú Unibanco has its own infrastructure to serve individual foreigners to invest in Brazil, led us to restructure our will be focus points for areas considered critical such as Legal, of our brand and strengthens a bank that is increasingly clients, which gives it a unique perspective on the financial subsidiaries to fully meet our international clients’ Accounting, IT and Operational Risk, among others, to report competent, personal, helpful and dependable. lives of those with whom it interacts. To offer appropriate needs.. (Economic Management Approach) requests for the development or modification of ordered products. (FS15) (PR3) (Product Management Approach) products and services, the bank has segmented its services The magnitude of the project required synergy between for three types of clients: Product development and labeling all areas, so that together we could build an environment The bank has a Corporate Policy for the Evaluation of to meet the needs of our clients. Every detail has been Retail Clients – with income of up to R$4,000, Itaú Products, Operations and Processes, whose guidelines painstakingly thought out to create branches whose Unibanco’s main concern regarding this category, which is are internally defined in circular HF 28 (financial holding). environment is accessible to all the different stakeholders. usually the starting point for relationships with the bank, is to offer resources and technologies to make the electronic This policy aims to establish a standard process of Product Evaluation Governance for new products and products being modified, ensuring that the plans, decisions and efforts are consistent with trade and ethics policies and authority levels established by existing regulations and senior management. The evaluation of products, operations and processes should cover all the major risks that are faced, whether they are credit, market, tax, operational, In Latin America, our growth focus was in retail activities, in which we have grown above market average in all countries where we operate, driven by the positive economic climate in the region. The new branches have different areas to meet the different channels more convenient. The Retail Client group contains needs of each stakeholder, such as Itaú Uniclass and Itaú the majority of the individual current account holders. Negócios. This demonstrates the value proposition that the bank wants to build with its clients, promoting transparency, Itaú Uniclass – with income between R$4,000 and responsible lending and financial education as a way of R$7,000, the clients receive special service in over 1,000 perpetuating our relationships. branches in Brazil. In accordance with the concept of bringing modernity and financial education to the client, We have renovated 998 Unibanco branches and 245 Itaú Uniclass has reformulated its website (www.itau.com. Unibanco CSBs. This means that 1,200 facilities have been br/uniclass). The new space on the web enables easy integrated with 3,900 service units of Itaú, in more than 500 browsing and the presents products and services with 3D conditions, changes in existing laws and technological simultaneous renovation projects per month for six months. animation, allowing the client to explore the pillars of the advances). The process should also determine which The project has mobilized more than 650 suppliers – 65 Feito para você crescer (Made for you to grow) positioning. furniture suppliers alone – contributing to the creation of On the website, users can find tips on how to organize both direct and indirect jobs: There were 150 construction budgets and planning. legal, etc., and consider both internal (nature of the activity, technical qualifications of employees and changes in the organization) and external factors (fluctuating economic Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Commercial Banking Itaú BBA Consumer credit Insurance, private pension and capitalization Business abroad Business Itaú Personnalité – with income higher than R$7,000, Credit Guide – service offered to help in the choice of clients have nearly 200 customized branches. We credit products that best suit a client’s needs or projects, understand that these clients have already fulfilled some given their stage in life. On the Internet, the client finds the of their aspirations and are transitioning to establishing option that is best suited to their profile, learns how to use their equity, requiring special financial assistance and the simulator tool and apply for the products and accesses products and services that are suitable for this phase in important tips that should be taken into consideration when their lives, which is more focused on long-term credit and taking out any type of loan, whether a short or long-term investments. They also have a modern website at their operation such as for purchasing property. disposal: www.itaupersonnalite.com.br. Reduction of the arrears interest rate – the reduction Within the Todos pelo Cliente philosophy, we seek to be more of the arrears interest rate significantly benefits clients flexible in creating products and services for a wide range who are behind on the payment of their loan contracts. of clients and the different phases of their lives, leveraging The rates were changed to the same rate as those of our expertise and exclusive service to help them achieve the contract with the client plus 1% a month, giving their goals. In order to better identify the needs of each type the client, in hard times, the possibility of reorganizing of client, we have created permanent consultation forums, their affairs. which have given rise to many innovations, such as the videochats developed for the Personnalité segment, with Financial education for individual clients online consultation for financial investments. For its individual clients and for all segments that need credit, Itaú Unibanco offers the Credit Guide, an The following products and resources are offered to online tool that identifies the ideal credit product and our clients: allows for consultation of other products related to the client’s needs. Per month, 75,000 users access this tool Cliente Estrela (Star Client) – we revamped this product after for simulation. we noted, from a survey of consumers, its importance as a symbol of prestige and distinctive treatment. This client niche, The Guide is further proof of Itaú Unibanco’s commitment assigned according to the relationships clients have with the to the Uso Consciente do Dinheiro program and the bank’s bank, accounts for 28% of the retail client base, which totals transparency regarding clients. When choosing credit in 3.7 million account holders. accordance with their needs, the client avoids unnecessary costs and excessive indebtedness. Segmented Products – we invest in product segmentation as a way of making credit granting quicker for the client. When On Itaú Unibanco’s website, there is also a simulator we detect a demand in the market, the bank develops credit intended to help clients realize their investments, make lines to meet clients’ needs. In 2010, three types of lines were plans and establish targets for their financial goals. The launched: Renovation, Solar Heaters and Travel. For 2011, user can choose between four goals: Reserve, Travel, we expect to increase the product portfolio in line with the Property and My Millions (and the target for 2011 is to development of Brazilian economy. include new projects, such as Vehicle, Academic Future, Retirement and the Future of Your Child). Debt Statement – the Itaú Unibanco client can monitor their financial situation online. By means of the debt In December 2010, the website, with its new layout and statement, the client knows exactly how much they owe more simple language, was visited by approximately to the bank in each type of transaction. The service was 6,000 people. This is because the Credit Guide is more created for clients to better organize their finances and use than a financial calculator that shows the monthly funds in a cautious way. installment for achieving a goal: the tool identifies the 58 Commercial Banking 58 Itaú BBA 76 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 Public sector In essence Our activities aimed at the public sector are structured to operate in all sections, including the federal, state and municipal levels of the Microfinance Executive, Legislative and Judiciary branches. To serve public sector clients, we use platforms that are independent from those of the In the seven years in which we have worked with microfinance, we have developed a sustainable business model. At the end of 2010, we had approximately 120 employees, including a team of 70 microfinance agents. In order to support the agents’ work, we invested in technologies to make credit granting quicker, and to maintain direct contact with the client. retail banking branches, with teams of specially trained managers to offer customized solutions in terms of tax receipts, foreign exchange services, asset management of public bodies, payments to suppliers, payroll of civil servants and military personnel, and retirement. Based on these platforms, we have a significant amount of business with clients from the public sector, particularly in the Brazilian states in which we previously acquired state-owned financial institutions. On December 31, 2010, we handled the payroll for 1.2 million civil servants and military personnel. Microfinance At the end of 2010, Itaú Unibanco’s microfinance operation was stronger because we had started to accrue the results of client’s risk profile, needs and financial prospects for the investments in knowledge management that have been a particular investment, and it also indicates what the made since 2003, when Microinvest was created as a result of a recommended products are. partnership with the IFC, a division of the World Bank. For clients and non-clients, Itaú Unibanco provides not In these seven years of work, we can say we developed a only financial guidance tools but also meetings and sustainable business model that is capable of offering credit innovative models, which educate and raise awareness for access under suitable conditions for the microfinance segment, those who participate. This is what happens at TEDx Vila which has been increasing with the growth of the Brazilian Madá, a new dialogue model that gathers contemporary economy. We directed the operation so as to offer credit to thinkers and activists who are challenged to make the best small business owners – most of whom are entrepreneurs presentation of their lives in 18 minutes. working in the informal market (without a Corporate Taxpayers’ Registry Number) in the metropolitan regions of São Paulo, Rio The model promotes dialogue and stimulates de Janeiro and Porto Alegre. communities, organizations and individuals to organize, in their communities, events like TED, which gather people to The regions that are more distant from the urban centers lack share ideas and experiences. (almost entirely) local financial services. Many entrepreneurs spend most of the day taking care of their companies, making a This meeting was held in August 2010 at the Cultura trip to the bank and, consequently, find access to financial services bookshop in Conjunto Nacional, São Paulo. The speech, impossible. The work of microcredit agents in underprivileged on Uso Consciente do Dinheiro, gathered 150 people and regions takes the bank to clients, allowing these entrepreneurs the discussion in the virtual community involved 400 to start using banking services and permitting a better people. Also on that day, the Livraria Cultura Itaucard was understanding of the activities carried out by them. In general, the launched. (FS16) (Sector Management Approach) micro formal and informal entrepreneurs from the D and E social grades (semi- and unskilled manual workers, casual workers and those dependent on the welfare system, as defined by the British National Readership Survey) are the ones served. (FS13) Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 59 Business We now have approximately 120 employees, including In numbers, Microinvest has already carried out more a field team composed of 70 microcredit agents and than 28,900 financing transactions, which is equivalent to nine supervisors. Our operations work as follows: the R$88.5 million. In 2010, year when we kept our focus on agent goes to the community, visits potential clients, strengthening the business structure, we signed 4,300 new analyzes their business and offers a credit line that is contracts, totaling R$14.9 million. This represents a growth suitable to their needs. This employee is also responsible of 14.1% and 12.7%, respectively, in relation to 2009. for explaining the conscientious use of loans to the small entrepreneurs, playing the role of a real social For the coming years, Microinvest has ambitious targets, transformation agent. (FS13) such as to increase its market share by 2.5 times. New steps in this direction were already taken in 2010 with the creation There are two channels for increasing the client base: of a group of well-known consultants specialized in topics a receptive one and an active one. In the receptive related to microcredit – such as behavioral economics, channel, clients have access to a telephone number by statistics and geostrategic planning. means of which they can register proposals. In the active channel, ten telemarketing operators offer microcredit We also established a partnership with the Lan CDI to the clients registered in the conglomerate’s databases network, a business division connected with the who have the right profile for this type of product. (FS13) Committee for the Democratization of Information Technology which mediates commercial transactions. By To support the work of these agents, we have made means of this partnership, the bank will offer member significant investments in methodologies and companie credit for improving local structures and, technologies aimed at speeding up credit granting and therefore, accelerating digital inclusion. Microinvest is also maintaining direct contact with the client, one of the preparing to turn Lan Houses into places where credit main characteristics of microcredit. We have partners agents can offer financial education programs and credit such as the Inter-American Development Bank (IDB), to the service’s users. which supported Microinvest with a large technical and financial cooperation project, and with the We believe in the consolidation of the microfinance Consultative Group to Assist the Poor, a body linked to segment because we built this operation with a the World Bank. governance structure that allows us to share the knowledge within Itaú Unibanco. Therefore, we can We also work together with the main universities in reinvest the results of the operation in the financial Brazil and around the world – such as Fundação Getúlio education of a segment that represents more than 20% Vargas (Getúlio Vargas Foundation – FGV), Massachusetts of Brazilian GDP, according to studies from FGV. (Sector Institute of Technology, University of California, Los Management Approach) Angeles, and Harvard – in the creation of technology systems which allow us to use smartphones to reduce Processes for improving the skills of employees the period for credit granting from seven days to one The staffing and abilities necessary for implementing day and eliminate the use of paper in the operation. microcredit are identified with the support of external consultants. There is a team of supervisors that manages This effort has allowed us to generate significant gains by the microcredit agents, ensuring compliance with meeting clients’ specific needs and increasing operating social and environmental practices and policies. In efficiency, making the cost of credit more accessible. As 2010, both supervisors and agents were subject to a result, Itaú Unibanco has a new way of operating in the product management training, which consists of their market, according to which the sustainability of clients is daily monitoring by consultants in the field. By actively seen as an integral part of the business model. participating in the activities of a microcredit agent, the 60 60 Commercial Banking 60 Itaú BBA 76 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 consultant can offer practical and educational support Microinsurance on issues related to collection, risk analysis, business After a broad survey in Brazil and in countries where this type prospects, time management and, in particular, the of operation is carried out, we created a family of accessible development of a quality client portfolio. insurance policies to meet the protection needs of the target public. The objective of the bank is to offer insurance coverage In 2010, Microinvest provided general training with that enables the social mobility of its clients despite the courses on the microcredit product, credit analysis, occurrence of unexpected events such as accidents, illnesses onsite collection, accounting, business prospects, or death of the breadwinner. operating systems, reading and use of reports, time management and field training. These courses are Small and medium-sized companies directed at new employees – regardless of their When thinking about the growth of micro, small and position – such as product analysts, telemarketing medium-sized companies, we structured ourselves to be operators, microcredit agents, operation assistants a major partner in clients’ businesses, providing financial and credit analysts. (FS4) advisory services and guidance on their daily needs and topics in a way that adds value and effectively contributes to Financial education for micro business entrepreneurs improving the performance of their businesses. In 2008, Itaú Unibanco developed, together with Microlins, the Capacitação Gerencial ao Microempreendedor To better understand the needs of clients and create (Management Training for Micro Entrepreneurs). This is innovative products and services, we implemented aimed at small entrepreneurs (from the C, D and E social a vertical structure that serves the many segments, grades, or manual workers and below), who usually work on subdivided into billing groups. The products, credit, their own – formally or informally – with annual revenues commercial, operational and legal collection areas work of up to R$240,000, but usually lower, and are not able to together so that we can have an operation that generates prove their earnings; they therefore have difficulty accessing benefits to all in the chain. inexpensive credit and in the desired amount. Internationally, operations for corporations are carried out The objective of the course, which lasts nine hours and by regional banks. In accordance with our ambition of is divided into three classes, is to mitigate the financial becoming a global player, we have been investing to foster vulnerability of these clients by means of guidance specialized national distribution in companies of different on strategic and financial business management. This sizes and from different areas. The major challenge of Itaú guidance is designed to minimize the risk of damage to Unibanco is to manage the national distribution in a country the business through the use of tailored administrative of the size and with the diversity of Brazil. practices, in addition to generating financial stability by means of the technical training of these people in In order to meet this demand, in 2010 we started a large Administrative Management. project to train our employees. This training project was prepared in the e-learning format for those involved in In the first year of this initiative, around 700 entrepreneurs the social and environmental risk analysis process. At completed the course and received diplomas. In 2009, as the same time, we developed, together with FGV, the a result of the merger of Unibanco – the company that Programa de Certificação Itaú Empresas, whose objective created Microinvest – with Itaú, the initiative was put on is to verify our specialist managers’ knowledge about hold. The project was resumed in the last two months products, sustainability, values, culture and ethics. Initially of 2010 and another 111 entrepreneurs completed the applied in the products area, the certification program will course. For 2011, the target is to have 900 entrepreneurs be extended in 2011 to all professionals who work in the completing the course. (FS16) corporate area. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 61 Business In 2010, these actions consolidated the vision of our value The implementation of the policy has brought innovation proposition. By providing further transparency and specialized to the financial market since it integrates social and advisory services, we have a better understanding of the value environmental risk criteria with the credit granting of our products. process in the medium-sized company segment. In 2011, we will continue to prioritize this economic segment. The Social and Environmental Risk Policy for Internal indicators show that entrepreneurs are increasingly Corporate Credit in the corporate area is in line more confident, particularly about the increase in their with Itaú Unibanco’s Sustainability Policy, which companies’ revenues, the evolution of Brazil’s economy and establishes the operational guidelines in all its the prospects of investment in their businesses. We are very business activities and relationships. The policy well structured to take advantage of the opportunities that is based on internationally established policies, the growth of the Brazilian economy offers. practices and principles, such as the Equator Principles and the social and environmental Social and environmental management for corporate credit: classification of the IFC, and was developed policy, risk assessment and monitoring according to the standards of relationships with the The Social and Environmental Risk Policy for Corporate different stakeholders listed by AA1000. The policy is Credit was published in December 2007. In this policy, available at www.itau.com.br/sustentabilidade. Itaú Unibanco assumed the commitment to work in partnership with its clients, cooperating in making effective changes in the relation among production and commercial activities, the environment and society. Product or service developed to generate specific social benefit* (FS7) Microcredit 243 microcredit contracts. Crédito Universitário (University Credit) R$30 million in assets. Microcrédito Produtivo Orientado (Guided Productive Microcredit) The active portfolio of clients had 3,510 clients by December 2010; The amount granted in 2010 was R$14,918 million; The number of loans granted in 2010 was 4,309. Life insurance for women As the Instituto Brasileiro de Controle do Câncer (Brazilian Institute for Cancer Control – IBCC) was a partnership with Unibanco, we are entering into a new contract that also includes the products of Itaú. For this reason, we do not yet know the amount Itaú Unibanco granted in 2010. Unibanco alone granted approximately R$36,000. PIC capitalization plan The amount granted to AACD (Association for Assistance to Disabled Children) in 2010 was R$2.1 million. Seguro Itaú Vida (Itaú Life Insurance) The Seguro Itaú Vida product offers, once for each term, a Basic Check Up (an appointment with a general practitioner, a return visit and the following exams: hemogram, blood sugar, cholesterol and, for women, pap smear) as from the third month of the policy. From January to December 2010, we recorded 128,894 sales. Unemployment insurance Approximately three million policyholders have unemployment coverage. Extended warranty From January to December 2010, the insurance premiums of the line 95 (Extended Warranty – Assets) reached R$1.16 billion (Source: Superintendency of Private Insurance – SUSEP). FIES – Fundo Itaú Excelência Social (Itaú Social Excellence Fund) R$320 million (equity on December 20, 2010). Fundo Social Itaú Personnalité Futura DI R$240 million (equity on December 20, 2010). Fundo Crédito de Carbono (Carbon Credit Fund) R$190 million (equity on December 20, 2010). Fundo Governança Corporativa (Corporate Governance Fund) R$32 million (equity on December 20, 2010). * Monetary value, in reais, of this product or the number of transactions or clients. 62 Commercial Banking 62 Itaú BBA 76 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 The policy establishes analysis criteria and tools to In the credit decision process, the social and environmental identify the social and environmental risk management risk is taken into consideration so that the decision is based capability of the companies that are clients of the bank. on solid criteria that ensure the proper identification of this The tools are: risk as well, segregating those companies that do not have the proper capability to manage the social and environmental • Banned List; risks in their activities. For these companies, the credit is not granted. (FS1, FS2 and FS3) • Restricted List, which includes specific industrial areas that pose greater potential for social and Social and environmental risk assessment environmental risk; To assess the social and environmental impacts of its clients, the bank follows the Social and Environmental Risk Policy • Social and environmental self-assessment questionnaire; for Corporate Credit, which includes the following processes and procedures: • Social and Environmental Risk Analysis and social and environmental sector classification (high, medium and low risk); (a) Applies with the social and environmental classification A (high risk) or B (medium risk) to clients in the corporate area with credit involvement equal to or higher than • Visits by specialists in social and environmental analysis. R$5 million. The social and environmental classification consists of the segregation of the activity lines based The tools of the Social and Environmental Risk Policy on the associated social and environmental aspects, consider human rights issues (addressed in the Banned namely water consumption, electric energy consumption, List by means, for example, of the reference file of pollution, emission of liquid effluents, generation of employers who have kept workers in conditions similar to waste, atmospheric emissions, ecosystems, operational slave labor) and include sectoral methodology guidelines health and safety, industrial disasters and contamination for the analysis of specific industries that pose a greater of sites, in risk categories according to the methodology social and environmental risk, such as the sugar and provided by the IFC, also taking into consideration ethanol and pig iron industries. In May 2010, the social Brazilian specifics. and environmental risk analysis process was certified with the quality seal of the ISO 9001 process, showing the (b) The team responsible for the social and environmental bank’s commitment to excellence and the continuous analysis is specialized in the subject matter and allocated improvement of this activity. to the decision units of the credit business. This team has to provide information on the social and environmental By means of the Social and Environmental Risk Policy risk to those in charge of credit decision-making so that for Corporate Credit in the corporate area, the bank the decision is based on solid information that ensures encourages its clients to incorporate sustainable that the bank is not investing in companies that are not practices into their business strategies. The social and capable of managing their social and environmental risks environmental risk analysis also includes direct contact in accordance with its Social and Environmental Risk with the client, which seeks to further clarify possible Policy for Corporate Credit. practices that are not in accordance with the guidelines of Itaú Unibanco’s social and environmental credit (c) Always attentive to best practices and seeking the policy. In many situations, we saw clients implement continuous improvement of processes, the bank is also action plans aimed at improving their practices and the supported by the work of well-known consulting firms consequent increase in their capability to manage social in evaluating its Social and Environmental Risk Policy for and environmental risk. Corporate Credit. (Sector Management Approach) Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 63 Business Sustainability in products and services The idea is to provide a safe and virtual meeting point To disseminate sustainability issues to external for business executives, promoting debate, knowledge stakeholders, Itaú Unibanco offers products and services sharing and communication among professionals in such as the Sustainability Meter, an unprecedented Brazil, thus helping them face everyday challenges. The initiative in the financial market. By using this tool, model is also intended to disseminate the importance corporate clients can see the amount of paper saved of financial sustainability in conducting and increasing and total GHG emissions avoided through the use of business, by sharing experiences, information and digital signatures in foreign exchange transactions. Since ideas in an environment with easy browsing and high the launch of the foreign exchange digital signature in functionality. December 2009, over 3.7 million sheets of paper have been saved, and the forecast for 2011 is that this figure Comunidade de Empresas is a collaborative and should exceed 5.7 million. autonomous relationship network, under no interference of the bank. Itaú Unibanco also launched the MaxiConta Ambiental Empresas (Corporate Environmental MaxiAccount) – the first Projeto Progredir package of services in the Brazilian market whose purpose is Itaú Unibanco is one of the banks taking part in Projeto to make clients aware of sustainability issues. In this package, Progredir (Progress Project), launched by Petrobras in all transactions are carried out via electronic channels, with partnership with other Brazilian banks, which will start in no use of paper. The reduced account maintenance fee and 2011. The project involves granting credit to all direct and the charges for banking services that are potentially harmful indirect suppliers, generating the contract information to the environment have fostered the development of from the supply chain for the banks and making credit increasing environmental awareness. (EN6) granting easier for all of Petrobras’ suppliers. The financing collateral is in the form of receivables generated in To encourage and acknowledge projects that encourage Petrobras’ supply chain, which reduces the credit risk and, sustainability, considering both the results and the attitudes accordingly, the cost to the borrower. of those who develop them, the Executive Board of Corporate Products of Itaú Unibanco has, since 2008, offered Itaú Empresas (Itaú Corporate) on the mobile phone the Sustainability Award. The award is driven by the constant In line with the culture of innovation and aimed at providing search for the creation and implementation of new solutions more comfort to our clients, we were pioneers in providing a and improvements to products, business and processes with solution focused on the mobility and decision-making process economic, social and environmental benefits. of corporate clients. Comunidade de Empresas In 2010, we developed an application for the iPhone (which Launched in December 2010, Comunidade de Empresas also runs on iPod Touch and iPad) that enables graphic (http://www.comunidadeempresas.com.br/) is a social interactions when viewing payments and collections, network for business executives whose purpose is to simplifying the decision-making process and allowing review stimulate business and assist in the development of small, of current accounts, payments and payment orders sent or medium and large companies, in any industry. received from abroad. 64 Commercial Banking 64 Itaú BBA 76 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 Compror Parceria This entire flow can be followed up by the company’s We launched Compror Parceria (Compror Partnership) accountant, who can access the details and integrate (export) (credit for mediating negotiations between suppliers and information with the accounting systems. their partner purchasers) for auto makers, manufacturers, distributors, franchises, etc. Among the benefits the Pague Aqui Itaú program provides to suppliers is the receipt of payments Pague Aqui Itaú (Pay Here Itaú) is recommended for on the scheduled date and without risk, since it is not retailers with a large customer base, such as supermarkets, necessary to finance the clients’ purchases. For purchasers, drugstores, and commerce in general. By contracting the advantage lies in the revolving credit limit for Pague Aqui Itaú, these retailers offer comfort and financing their inventories, for the period required to convenience to their customers, who may make their receive funds from their own sales, in addition to more payments and pay their utility bills, such as water, attractive fees and the possibility of lower interest rates electricity, and telephone, quickly and easily , and and Tax on Financial Transactions. Itaú Compror also with extended payment hours. Besides the additional provides its suppliers and purchasers with an online tool source of revenue, Pague Aqui Itaú attracts people to the for financial and inventory management. establishments, which can help raise sales. Condominiums Card Sales Manager In 2010, we created exclusive and specific services for We developed the Card Sales Manager so that the client can condominium administrators and companies in this segment. reconcile all sales made with the main brands of cards (on Among the options offered, Registered Collection is a tool the market), and choose the most appropriate consultation that provides effective control over receivables by the method to make decisions. The actions permitted by this condominium’s administrator, and Condominium Card, a debit product are: card with a pre-established limit that enables the payment of everyday expenses, optimizing the maintenance routine of the • To receive the net sales amount of the cards of the main condominium. accrediting companies: Redecard, Cielo and Hipercard; Sala de Crédito • To provide receipts via Redecard on the following day, seven Itaú Unibanco and the São Paulo State Federation of days later and 30 days later, along with the full schedule; Industries entered into an agreement for the bank to participate in the Sala de Crédito (Credit Room) events • To view advance receipts via Itaú 30 Horas; that are periodically held by the entity for its business associates. The purpose is to provide financial advice to • To track the sales made on the Redecard machine. associates regarding loans, investment transactions and cash management. Financial education for corporate clients Corporate Client Sustainable Consulting Program Electronic invoice Itaú carries out financial education actions in the We made available a fully online solution – integrated with Itaú form of consulting and business training services. Companies on the Internet – to manage electronic invoices The bank offers, in partnership with the Brazilian for the bank’s corporate clients. The solution enables the issue, Service of Support for Micro and Small Enterprises, receipt and custody of electronic invoices, for the legal term, consulting services for companies in the following thus allowing the company to fully reconcile and manage its two segments: Companies 3 (with annual revenue receivables (invoices issued and collection) and payments between R$500,000 and R$6million) and Itaú Business (invoices received from suppliers). (with revenue below R$500,000). Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 65 Business The consulting program consists of a visit to the client to make Credit cards a diagnosis of the company’s current situation. An opportunity Itaú Unibanco is the leader in the consumer credit map is then prepared, comprising actions aimed at the client’s segment in Brazil. Through Itaucard, Hipercard and financial reorganization and the subsequent return to growth, Partnerships, it provides a wide product portfolio to 40.8 through a distance course and the supply of supporting material. million clients, both account holders and non-account holders, which originated in proprietary channels and For a 60-day period after the beginning of the consulting through partnerships with outstanding companies services, consultants follow the company’s development and in their respective industries. Between January and the implementation of previously-defined actions, and they are December 2010, the transacted amount reached R$129.9 available to clarify doubts. billion, which accounted for a 26.4% increase compared to the previous year. In 2010, 150 companies took part in the sustainable consulting program and achieved a 20% improvement in their default rates. In 2010, even with the great effort to complete the integration of all the processes of Itaú and Unibanco Currently, 500 companies are participating in the program. (FS16) involving credit cards, we were able to maintain our leadership and even gain market share. The Brazilian credit Technological and Financial Extreme Makeover card market grew 22.9% in financial volume of transactions Developed by Itaú, together with Microsoft and the Pequenas over the year. The amount transacted using this payment Empresas, Grandes Negócios (Small Companies, Big Business) method also grew in Brazil, to R$333 billion in 2010 from magazine (Editora Globo), this project offers complete R$271 billion in 2009. This positive result was mainly due consulting in finance, technology and sustainability, helping to the outstanding performance in credit management, selected clients to improve their processes, management and increasing efficiency in the distribution and attraction of social and environmental performance. new clients and leverage provided by the new partnerships entered into with strategic clients in the retail sector, as well In the five editions of the project, micro and small as marketing efforts and services focused on developing companies fully changed their situations, proving that the relationship with the contracted client base. good control and management strategies can help in the efficiency of companies of all sizes. This leadership brings the responsibility of setting an example for the market, through the offer of innovative The consulting company delivered lectures on sustainability products and quality service, focused on transparency and financial education, diagnosed the sustainability stage and the conscientious use of credit. Bearing this in mind, of companies and made recommendations aimed at and inspired by the ethos of Todos pelo Cliente, practically improving the development of their economic, social and the entire credit card operation was reviewed, based environmental aspects. on the opinions of clients and on the main complaints recorded by our customer service and the consumer The website is easy to browse, intuitive and visually attractive, protection bodies. so that the client may interact with the consulting company on issues such as cutting costs, sustainability, productivity, safety, The integration of the platforms helped provide greater client attraction and retention, and mobility. At the end of the speed in problem solving – and we have been able to project, the client receives a customized report with tips and meet more than 93% of the requests within 24 hours. In suggestions about how to obtain sustainable and long-term 2009, responses were given within 3.5 days on average financial growth, strengthening the bank’s partnership role with (more information on the Ombudsman’s Office of Itaú small and medium-sized companies. (FS16) Unibanco is on page 107). 66 Commercial Banking 66 Itaú BBA 76 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 In 2010, even with the great effort to complete the integration of all the processes of Itaú and Unibanco involving credit cards, we were able to maintain our leadership and even gain market share. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 67 Business Being familiar and transparent with the client is University loan our priority. We opened 31 Itaucard service centers The university loan, a credit facility with various interest rates throughout Brazil. The purpose of the shops is only that are often subsidized and/or collateralized, either totally to render customer service, and not to sell cards, or partially, by the government, is a very important financial since the focus is on service provision – and the instrument in the United States and many European local government of São Paulo bars the sale of this countries. In the United States, the balance financed using type of product by retailers that are not banks. this credit facility exceeds US$500 billion at present. They are venues in which clients may resolve all their doubts, check invoices and make complaints This type of loan is starting to be granted in Brazil, with directly to an employee. Itaú Unibanco being the only private bank to provide this credit facility. The product makes the dream of higher The Hipercard brand is the largest donor to the education possible for low-income students and for those AACD. In 2010, the campaign for clients to donate whose income is not sufficient to pay tuition fees. This funds through the cards collected R$4 million. loan is available for current and future students of 103 private education institutes (30 agreements), at over 255 Credit cards and donations to campuses located in 24 Brazilian states. social organizations Our card portfolio offers alternatives that enable One of the new developments we implemented in 2010 clients to make regular contributions to institutions was to streamline the contracting process, which is now involved with preserving the environment, protecting directly available in the university secretary’s office or the rights of children and adolescents, and supporting in mini-shops we have opened within the educational disabled people. institutions, to inform students and parents of the benefits and make the contracting easier. In 2010, Itaú Unibanco Through the Sempre Presente (Always Present) reached the milestone of 10,000 students served by the Program, which accumulates points as Itaucard program, exceeding R$32 million in the portfolio. Of this clients spend money using the card, clients can total of benefited clients, 78% come from families whose have these points converted into donations to parents do not have a higher education degree, which these institutions. shows the potential for social transformation provided by the program. (FS7) And by means of the Hipercard, we encourage client donations to the AACD (R$2, R$5 and R$10), charged By the end of 2011, there will be over 300 campuses directly to the card, to contribute to rehabilitation programs served by Itaú Unibanco, attended by approximately 600,000 for disabled children and youths. (FS7) students, who will then have access to our product and distribution channels. (FS13) Debit card An essential instrument, necessary for the economy as Financial education in regard to university loan a whole due to the automation of processes, the debit For Itaú Unibanco, it is not enough just to grant a loan: card is another product for which we hold a leading it is necessary to offer guidance to the client about how position in the Brazilian market. Each current account to use it in an appropriate and beneficial way. For this opened has the possibility of providing the client with a reason, after completing a form for credit approval, and card. This is a market that grows at annual rates of 20% before the effective contracting of a loan, a university by financial volume of transactions and we have grown credit consultant contacts the students and guarantors above this average. – in general, the parents – to explain how the product 68 Commercial Banking 68 Itaú BBA 76 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 work and to provide comparisons with other financing branches, into multiple distribution channels, such as Lopes alternatives, whether educational or not, that exist in the Consultoria and Coelho da Fonseca. market. All possible doubts are addressed during this contact – which is mandatory, since these are long-term In addition to these channels, we operate through agreements and not the loans most commonly accessed onlending, a product that meets the financing by this population, which are focused on convenience requirements of purchasers of properties built with usage. For the duration of the agreement, Itaú Unibanco financing from Itaú Unibanco. This procedure is invests in continued communication with the client base, even faster, since documentation required from the emphasizing the importance of keeping up with payments, seller and the property for the financing have already sending reminders about maturity dates and, when been analyzed by the bank, simplifying the list of necessary, warning about possible demands for settlement documents and forms for the purchasers. The strategy in the case of default. To complement this, those who are has enabled us to soar from an average penetration of financially responsible for the student and are co-signers of 25% to 75% in onlending. the agreement also receive communications that encourage continuous monitoring of the current financial indebtedness The real estate portfolio for companies also posted of the students. (FS16) an excellent performance in 2010, driven both by the bank’s capacity to grant loans and by the role of IBBA in Real estate loan the projects in which it works with companies in the real The result of major investments over the last few years, the estate industry. real estate loan was one of the highlights of Itaú Unibanco in 2010, with a 56% growth in the loan balance, reaching R$13.3 Another factor responsible for this performance was the billion. This is a market that grows in Brazil at rates of 50% to creation of Imobline PJ (Corporate Imobline), a new system 60% per year and that should continue at this pace for the platform that permits the whole financing process, from foreseeable future, since it still has a share of only 4% of GPD. when it is first contracted to the release of the funds, to be carried out on the Internet, enabling the business With this bright outlook, we created a different way of executive and commercial staff to keep track of the distributing loans, integrating a philosophy focused on operation in real time. Imobline PJ transformed this process, the client’s vision. We have concentrated on convenience, making it much faster and more transparent. transparency and promptness so we can be the first choice of candidates for real estate financing. Guided by this For 2011, our challenge is to improve customer service and philosophy, we established a credit processing facility. The strengthen the relationships with clients, so that we can contracting cycle fell from 72 days in 2009 to 21 days in 2010, double our portfolio. as compared to an average of 40 to 50 days on the market. Real Estate Loan – Social and Environmental Management: We were able to create a remarkable system, with credit policies, risk assessment and monitoring approval within one hour, seven days a week. Another The Social and Environmental Policy – Real Estate Loan was advantage is the fact that the documentation required by the implemented to prevent social and environmental risks (both bank is the simplest in the market, and the client may choose current and future) stemming from the financed items. It is a financing term of up to 30 years. The system enables us to applied to all financing for the construction of residential and/or hold 70% of the consultations online. commercial developments (Plano Empresário – Entrepreneur Plan) granted in all regions of Brazil, as approved by the relevant credit With the evolution of the process for investing in technology, executive board. The policy is based on the National Environment we expanded the sale of the product, formerly restricted to Policy, and this loan is not available to the public at large. (FS1) Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 69 Business The main purpose of this guideline is to mitigate possible questionnaires started to be applied, training was provided risks of environmental liability or non-compliance with and supporting material on how to fill them in was distributed laws regarding social and environmental aspects of the to third parties and the bank’s employees. (FS4) developments to be financed by Itaú Crédito Imobiliário (Itaú Real Estate Loan). Among the risks mitigated by this policy are: The policy proposes the application of three social and environmental questionnaires for all developments financed 1) Environmental; by Itaú Unibanco through the Plano Empresário product. 2) Financial losses; The questionnaires address social and environmental 3) Impacts on the bank’s image. aspects of the company, development and land. Two questionnaires should be filled in by the business executive Depending on the risk identified, the Real Estate Executive and their objective is to obtain information on the social Board may refuse the credit/project, and the IBBA Loan and environmental practices of the company and the Executive Board may reject the development project. The development in question. The third questionnaire is filled corporate governance bodies responsible for approving in by the outsourced engineer and it should comprise the theses policies are: findings and information obtained during the visit to the site of the future development. (FS3) • Product Management – Itaú Crédito Imobiliário: Responsible for creating, implementing and standardizing sustainable The results of the questionnaires are measured by the practices for Itaú Unibanco’s existing real estate products. systemic platform, and when a financial risk or possible risk for the bank’s image is identified, the transaction is submitted • Real Estate Loan Superintendency – Corporate Credit Area: to an internal analysis. The Imobline PJ systemic platform Responsible for creating and standardizing the loan guidelines comprises new systems and operations developed to contract of the social and environmental policy and forwarding and manage the agreements related to Plano Empresário. projects to the Real Estate Loan Executive Board for approval These questionnaires are answered by the responsible or rejection, should there be social and environmental points professionals and enable an automated analysis (depending for attention in the questionnaires or non-compliance with on the answers provided in the forms). contractual clauses. (FS1) In addition to the questionnaires, the policy includes a clause • Real Estate Loan Superintendency – Monitoring: in the agreements related to Plano Empresário, whose purpose Responsible for monitoring compliance with contractual is to strengthen the National Environment Policy (Decree clauses and social and environmental problems identified No. 99,274 and Law No. 9,605/1998) and the provisions of during the payment of the installments. The Real Estate the Federal Constitution. In the event the company does Loan Committee is the authority empowered to pay the not comply with the laws, Itaú Unibanco may terminate the other installments and deny them or demand certain agreement or advance the settlement of the obligations conditions, should there be social or environmental points contained in the financing agreement. (FS1) (FS2) (Sector for attention in the questionnaires or non-compliance with Management Approach) contractual clauses. (FS1) (FS3) Consortium The suppliers responsible for checking the financed Itaú Consortium is undergoing development at this construction and the points for attention in the social and time. After the organization of an exclusive executive environmental questionnaires for granting credit received, board for the area, in 2009, an evolution in the processes in 2010, a handbook on how to fill in the questionnaire. was noted, producing quite important results over Whenever there are improvements in the questionnaires 2010. Taking advantage of the market upturn and the and/or processes, the handbooks are updated. When the consumers’ growing knowledge of consortia, in addition 70 Commercial Banking 70 Itaú BBA 76 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 to the strength of the brands Itaú and Fiat (with which Private Banking we work), Itaú Consortium posted an increase in revenue In 2010, Itáu Private Banking confirmed its leading position in the that exceeded 100%, when comparing 2009 and 2010. domestic market. Its tradition and experience in management of In addition, the division’s monthly sales average doubled third parties’ services are illustrated by the various awards received between January and December 2010, reaching 16,000 and by the growth in managed assets, which totaled over US$71.3 quotas sold in December 2010. billion at the end of December 2010. In Real Estate Consortium, Itaú Administradora de Consórcio The internationalization strategy has already posted significant stood out with successive improvements every month, results. Itaú Private Bank International is present in the main ending the year with the sixth biggest market share. As financial markets, with offices in nine countries, such as regards Vehicle Consortium, Itaú and Fiat acted together and Luxembourg, Switzerland and the United States, along with ranked third in market share at the end of 2010. Thus, 2011 Brazil and a number of countries in Latin America. At the end of will be important to consolidate the sustainable growth and 2010, Itaú Private Bank International had 5,700 Latin American to continue increasing market share. clients with US$14.5 billion of assets under management. Wealth Management & Services Private Banking Awards Innovation in products and services set the tone for 2010 In 2010, in accordance with Officina Sophia, we reached the in the area responsible for all investment products for highest satisfaction level among clients since the beginning of individuals and companies – and involves the activities of our activities in this market. This result shows that we are on the private banking, asset management, brokerage services, right path to assuring the sustainable growth of our business. individual investment products, capital markets services, In addition, the recognition of our activities in the market also internal controls and compliance, as well as the area of came by means of awards, such as the ones given by Euromoney institutional and foreign clients. magazine, as The Best Private Bank in Brazil, The Best Private Bank in Peru and one of the Top 4 Private Banks in Latin America, Institutional clients being the only bank from Latin America to be included on Itaú Asset Management is the largest private manager of the list. Similar awards were won from publications such as institutional clients’ funds in Brazil. It serves institutional Private Banker International (Outstanding Private Bank – Latin clients in the largest global financial centers and offers a America/2010,Outstanding Private Bank – Latin America/2009 full portfolio of accessible services at a world-class level. and Outstanding Private Bank – The Americas/2008) and Financial The structure is segmented to serve clients in the Americas, Times Global Wealth Management (Best Latin American Private Europe, Asia and the Middle East. Banking 2010). Such honors are strong and consistent evidence of our performance in target markets. The service structure was developed to provide a direct, close and personal relationship. Our team of Investment products and private institutional managers is distributed by market niche, pension plans for individuals and this allows us to understand each segment in In 2010, the unification of investment products in the Itaú Unibanco depth, to identify its needs and provide specific structure had, as its main difference, the change in strategy from financial products and services, on an integrated and product perspective to client perspective, by focusing on the client’s customized basis – always with full transparency and in personal projects. For the purpose of understanding the client’s set compliance with a strict code of ethics. of needs, the bank started to offer a complete financial advisory service based on financial education. The figures in the area reflect All this is with the commitment of continuously innovating, the maturity of the market and the attitudes of investors, who have to always offer new products and services that meet the proven to be increasingly aware of the relevance of contracting specific requirements of each client. supplementary private pension plans in Brazil. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 71 Business Get to know the Principles for Responsible Investment Itaú Unibanco’s investment products are mainly characterized by the offering of appropriate financial planning, taking into account the client’s needs, investment 1 – Incorporate ESG issues into investment analysis and horizon and stage in life. decision-making processes The bank is the only one that, under the scope of investment recommendations, implements the Investor 2 – Be active owners and incorporate ESG issues into our Profile Analysis, taking into account all the investment ownership policies and practices products of the portfolio. 3 – Seek appropriate disclosure on ESG issues by the entities We are currently the second largest company in the market, in which we invest with over R$51 billion, as compared to the volume in the 4 – Promote acceptance and implementation of the market as a whole of approximately R$250 billion. Principles within the investment industry Itaú Asset Management With over R$240 billion* in assets, Itaú Asset Management 5 – Work together to enhance our effectiveness in remained the leader in the asset management market in Brazil. implementing the Principles In Asia, we were the first Latin American bank to open, in 2010, an asset management company: Itaú Japan Asset Management, 6 – Report on our activities and progress towards one year after the opening of Itaú Asia Securities in Tokyo. implementing the Principles In order to continuously improve the quality of services and Main initiatives related to PRI in 2010 the sustainability of activities, Itaú Asset Management uses 1. PRI world meeting the management excellence model of Fundação Nacional da Itaú Asset Management sponsored the World Meeting of Qualidade (National Quality Foundation), which is supported by Signatories to the Principles for Responsible Investment, eight pillars: leadership/governance, strategy, clients, society, held in San Francisco, United States, which was attended information, knowledge, processes/suppliers, and results. In by over 300 people in October 2010. The attendees order to assess the adherence to the model in 2010, Itaú Asset were CEOs, CIOs and executives in charge of the largest Management took part in the Prêmio Paulista de Qualidade institutional investors and asset managers in the world. da Gestão (São Paulo Management Quality Award), and was The attendance of Itaú Asset Management reinforced not awarded a gold medal. only our concern with the issue, but also the relevance of * Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais (Brazilian Association of Financial and Capital Markets Entities – Anbima) management ranking – December 2010. Sustainability in focus strategic planning. 2. Engagement in the fight against slave labor Itaú Unibanco was the first large Brazilian retail asset manager Together with other signatories to the PRI and with the to adhere to PRI. The PRI implementation project was initiated Latin American Sustainable Finance Forum, a partnership within the society pillar of asset management strategic planning between the Center of Studies on Sustainability of the and has been adopted as: FGV and the IFC, Itaú Asset Management took part in the initiative against slave labor. This initiative consisted • an international best practices standard related to of the sending of a letter to all companies listed in the sustainability in investments; BM&FBovespa and requesting their adherence to the Pacto Nacional para Erradicação do Trabalho Escravo, • an essential tool for promoting social and environmental and challenging the policies and practices of the listed and governance issues in the companies in which the companies aimed at preventing slave labor in their funds invest. activities and production chains. 72 Commercial Banking 72 Itaú BBA 76 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 Carbon Disclosure Project 3. Emerging Markets Disclosure Project (EMDP) Itaú Asset Management is a signatory investor to In 2010, Itaú Asset Management took part, together with the the Carbon Disclosure Project (CDP). In this capacity other signatories to the PRI, in the international engagement it signs, together with other signatory investors, initiative EMDP. This is aimed at incentivizing companies to the letter with the request for information sent to be more transparent in environmental, social and corporate companies on the risks and opportunities arising from governance issues in developing countries. climate change. The CDP currently has 551 signatory investors, which total US$71 trillion in assets under 4. Developing an investment analysis methodology management. In 2010, Itaú Asset Management engaged a consulting firm specialized in sustainable finance to work directly Climate change may give rise to risks in sectors most with investment analysts, providing inputs for the exposed to variations in climate conditions. However, this development of a methodology that incorporates topic also leads to opportunities: currently, the area has two environmental, social and governance issues into the funds related to this topic, that is, the Itaú Ecomudança and fundamental analyses of the investees. the Itaú Fundo Índice de Carbono. (EC2) This project maps out the main social and environmental The PRI were developed by an international group externalities of the significant economic sectors. In of institutional investors, reflecting the increasing addition to mapping these externalities, the project relevance of ESG issues to investment practices. has included approximately ten hours of training, for 22 The process was convened by the UN Secretary- people, addressing the analysis of ESG (environmental, General. These principles present a voluntary social and corporate governance) issues in the investment methodology by which investors may incorporate decision-making process. Variable income and credit environmental, social and governance issues into analysts attended these training courses, as well as the investment analysis process and into their asset members of the bank’s sustainability team and Itaú Asset holding practices. Management’s products area. For further information on PRI, visit the website 5. Voting policy http://www.unpri.org/principles/. Since 2009, the voting policy (holding of assets) Itaú Asset Management has specifically stated that business Product innovation sustainability should be taken into account when Wealth Management Services has an area exercising the right to vote. This emphasis on business responsible for promoting innovation in developing sustainability is guided by three pillars: acting proactively new products and services. According to an in defense of the environment, social development internationally acknowledged methodology, the and good corporate governance. In 2010, Itaú Asset WMS’s innovation area holds periodic meetings Management voted in 47 meetings complying with the aimed at encouraging the development of guidelines of this policy. innovative solutions to meet the clients’ and the organization’s needs. Itaú Asset Management’s voting policy, as well as the votes cast, are publicly available at the website www.itau.com. In addition to the process of innovation in br [under Para Você (For You) / Investimentos (Investments) products and services, Itaú Asset Management / Fundos (Funds); / Informações aos Cotistas (Information has investment funds that take into account to Stockholders) / Política de Voto do Itaú Unibanco (Itaú environmental, social or corporate governance Unibanco Voting Policy)]. (FS4, FS5, FS10 and FS12) issues when selecting the invested assets. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 73 Business Social and environmental funds noteworthy governance practices, as set forth in the Canal Futura Corporate Governance Index of BM&FBovespa. In an unprecedented action, together with Fundação Roberto Marinho (Roberto Marinho Foundation), we Índice de Carbono have launched the Fundo Social Itaú Personnalité The Fundo Itaú Índice de Carbono, amounting to Futura DI, which allocates 30% of revenue from R$173,761,201, is an alternative investment for the purpose management fees to Canal Futura (Future Channel). of portfolio diversification linked to global efforts to reduce This channel is dedicated to education, one of the greenhouse gas emissions. By investing in this fund the largest challenges faced by Brazil. investor contributes to the development of the carbon credit market, which has an essential role in the fight Ecomudança against climate change. Itaú Ecomudança, a fixed income fund, has a net equity of R$245 million and allocates 30% of Financial education at WMS management fees to environmental projects for In order to meet the increasing demand for financial reducing GHG emissions. education, we produce videos every two weeks that bring knowledge of the financial market to our clients. The funds allocated by Ecomudança have supported This information is provided in a clear, innovative and programs focused on relevant environmental impartial way that is focused on their objectives and preservation issues. Projects include recovery of native providing solutions that are suitable to their needs. forests, replanting of native seedlings in degraded areas, Accordingly, we encourage our clients to use their money replenishment of forests in environmental reserves, carefully and to become increasingly responsible for reforestation and prevention of deforestation. Projects their financial decisions. These videos were originally are selected by a council composed of sustainability available only on the website of TV Itaú Corretora. Today, leaders in the private sector, society, academia and Itaú we have increased the range of the channels on which Asset Management. the programs are aired, which include TV Investshop, Itaú Corretora’s Youtube channel and podcasts on Twitter Excelência Social and on the websites of Itaú, Itaú Personnalité and Itaú FIES is an option for a socially responsible Uniclass. Non-clients may also watch the programs. investment, since it invests in shares of companies with recognized ESG practices. Furthermore, it We produce two online TV shows exclusively with allocates 50% of the investment fund’s management financial education content. In the Orientação Financeira fees to Non-Governmental Organizations (NGOs) (Financial Guidance) program, the Education Manager working on childhood, environmental and for WMS Investors and banking and market experts are employment education. From 2004 to 2010, FIES interviewed on the best ways for people to manage their allocated over R$13 million to social programs financial affairs and take advantage of opportunities to developed by 77 NGOs from all over Brazil, benefiting reach goals. In the Planejamento Financeiro (Financial over 15,000 children and youths and over 1,500 Planning) show, a bank economist directly answers clients’ education professionals. In 2011, over R$3.6 million financial questions that arrive via e-mail. Each client is will be invested in technical and financial support to guided on how plan to reach their objectives, always 20 organizations. FIES currently has a net equity of taking into account the suitability recommendations. R$273 million. In 2010 we produced 36 videos on financial education, which were viewed by approximately 90,000 people (10% of total visits to the TV). (FS16) Governança Corporativa Itaú Governança Corporativa (Itaú Corporate Governance), with R$360 million, invests in shares of companies with 74 Commercial Banking 74 Itaú BBA 76 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 We produced two online TV shows exclusively with financial education content in which specialists of the bank provide tips on how to manage financial affairs. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 75 Business Itaú BBA notes totaled R$18.9 billion, and securitization operations amounted to R$4.7 billion in 2010. Expanding inside and outside Brazil IBBA is responsible for handling the corporate segment We are extremely proud of being the first Brazilian bank to and the investment banking activities. IBBA’s management lead National Treasury funding, by way of the Global 2041 model is based on building close relationships with clients, issue, which totaled US$500 million. With respect to variable meeting their needs and offering customized solutions. The income, we are proud of being one of six bookrunners of services in the corporate segment include the provision the public offering of Petrobras shares – the largest ever of banking services to large companies, whereas the carried out in the world – in addition to having book run investment banking activities include the offer of financing the amount of R$132.3 billion in public offerings. We have to this segment by means of fixed and variable income kept this position among the market leaders and taken part instruments, among others. in 59% of the operations, which represents 89% of the total volume issued in the period. 2010 was a year of great achievements for Itaú BBA. The wholesale and investment banking total increased 66%, as Additionally, IBBA provided financial consulting services compared to 2009, to R$2.8 billion. This was a result of the to 35 merger and acquisitions operations, and closed consistent service to companies, in periods of both crisis and the period ranking second in the number of operations, economic upturn. We understand that the sustainability of according to Thompson. our business is dependent upon the long-term relationships IBBA closed the year with 3,000 large and medium-sized we build with our clients. companies in Brazil and the Southern Cone as clients, and The segregation of clients into Corporate (companies with responsible for the 1,000 largest institutional investors annual revenue between R$150 million and R$500 million) operating in Brazil and abroad. Loans account for 40% of and Large Corporate (above R$500 million) has enabled us the revenue in this area, and the clients’ profile is quite to provide a more specialized service. Adopting efficiency differentiated, which causes the bank to permanently parameters and developing customized products have led to invest in training and hiring talent. We have a staff of 3,000 the bank’s leadership in key operations. employees, who have an in-depth understanding of clients and who develop products and services to cater to such a Because we are well prepared, we can meet companies’ high diversified portfolio. demand for sophisticated products, such as fundraising to keep up with the growth of the Brazilian economy. Itaú BBA, In 2010, IBBA made progress in the structuring of as the largest investment bank in Brazil, has a fundamental international units, by optimizing service to clients in role in representing Brazilian companies and Brazil to other Latin America countries, as well as to Brazilian clients international investors. undergoing international expansion. Accordingly, IBBA has started operations in Argentina and Chile. Peru will be the The outcome of this investment in reporting the qualities of next target, in line with Itaú Unibanco’s strategy of being a Brazilian companies and our market was the international regional player. placement of a significant volume of debt securities of Brazilian companies. The reward for our efforts was to lead In order to service the distribution of Latin American in the Anbima ranking of the fixed income distribution companies’ securities in the global markets, with category in December 2010, with a 23.3% market share, and approximately 2,000 corporate clients and 200 institutional to rank second in international fixed income issue, in which investors, in very different countries, we have modernized we operated as joint bookrunner of offers, with a total volume our offices in New York, London, Hong Kong, Tokyo and of US$13.3 billion. Issues of debentures and promissory Dubai. Itaú Europa is now called IBBA Internacional, which is 76 Commercial Banking 57 Itaú BBA 76 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 part of the strategy of monitoring multinational companies Itaú BBA’s social and environmental management: policies, operating in Latin America as well as subsidiaries of Latin risk assessment, monitoring and staff training American companies expanding to Europe. For the purposes of bringing about and implementing the guidelines set forth in Itaú Unibanco’s Social and In the investment banking area, our goal for 2011 is to Environmental Policy for Granting Loans to Corporations increase the securities issued by Brazilian and Latin American and meeting the specific needs of IBBA’s clients, we created companies. In the corporate area, we face the constant the Itaú BBA Internal Procedures Manual. According to this challenge of increasing and improving the relationships manual social and environmental assessment comprises with our clients, including ensuring sustainability in not only the analysis of social and environmental risks this relationship through social and environmental risk and impacts, but also the assessment of the social and assessments. Accordingly, we have worked on a project to environmental management capacity of the economic improve service to ultralarge clients, and we also plan to groups and Itaú BBA’s clients along with financed projects. change the social and environmental risk assessment area The Itaú BBA Internal Procedures Manual is applicable to into a strategic area, adding value to our clients. credit relationships with companies deemed to belong to the Corporate and Large Corporate segments. This Itaú BBA’s excellent performance is the result of a series of classification uses annual revenue above R$150 million as actions in line with Itaú Unibanco’s new culture. The slogan its main criterion. DNA Itaú BBA (Itaú BBA DNA) represents our aim of being seen as a bank in which people are proud to work – one The tools used in the social and environmental risk that is able to attract and retain the best talent in the market assessment, as defined in the Internal Procedures Manual, and be the first option for companies seeking transparent, are, among others: Banned and Restricted Lists, available modern products and services at a cost suited to the public information, analysis conducted by specialized established relationship. advisory firms, when applicable, and assessment of potential social and environmental risks and the client’s social and We believe that the need for financial investment over the environmental management profile. next ten years will triple in view of the demand from the 30 million new consumers who have entered the consumer The process of social and environmental assessment of market and the other 30 million who will do so in the next projects involves an analysis of the risks and impacts, as five years, who are responsible for turning the wheels of the well as the relevant mitigating factors. The outcome of economy. All our efforts will make us ready to meet our this assessment may give rise to recommendations for clients’ demands in a timely, flexible and competitive way. improvement actions, taking into account good market practices. Based on these recommendations, the client Climate change also poses a challenge and, therefore, will prepare an action plan, which should be analyzed and among our priorities is the improvement of our capacity accepted by the bank. to deal with this issue, aimed at the medium- and longterm development of mitigation and adaptation tools and IBBA has examined the possibility of expanding, in the measures, including financing mechanisms. Additionally, it is medium term, its client relationships to point out and noteworthy that IBBA was a pioneer in taking into account create opportunities for sustainable businesses. Currently social and environmental aspects when granting credit lines, the internal policy strengthens the bank’s relationships having developed its first management system in 2000. with its clients and other stakeholders, by pointing out This background means that our executives act as agents the best market practices both for the client and for the disclosing and spreading social and environmental risk banks involved with IBBA in syndicated operations, thereby management practices to other financial institutions that are positively contributing to the development of more peers of Itaú BBA. sustainable projects. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 77 Business Additionally, Itaú Unibanco has been a signatory IBBA also provided the following training programs to our to the Equator Principles since 2004. Therefore, for banking areas: the purpose of complying with the project finance transactions with amounts equal to or higher than • Entendendo o que é Risco Socioambiental, an US$10 million, it assesses the social and environmental e-learning course provided to the entire commercial risks and impacts of projects primarily by using the and back office areas that have a relationship with criteria established by the Performance Standards the social and environmental risk assessment team. and the Environment, Health and Safety Guidelines of This training program was aimed at communicating the IFC. Among the topics addressed by these criteria the concepts related to social and environmental are biodiversity, involuntary resettlement, health and risk assessment in Itaú BBA, as well as the associated safety of communities and work conditions (related to business opportunities; occupational health and safety), with the purpose of • Monitoring of social and environmental covenants, for the preventing slave and child labor. analysts from the covenants control area, for the purpose In 2010, the following actions related to social and of aligning responsibilities in the monitoring of social and environmental assessment were carried out: environmental covenants, if any, in contracts; and • Verification of the social and environmental practices of • Equator Principles and Social and Environmental Risk economic groups in connection with the identification Policy for Granting Loans to Companies, aimed at Itaú of indications of involvement in activities listed on the Europa’s employees. Banned and Restricted Lists, as defined by the Social and For the purpose of improving the relationships with Environmental Policy; external stakeholders, Itaú, through Itaú BBA’s social and • Meetings with other areas of IBBA involved with Social environmental risk assessment area, gave presentations at and Environmental Risk Assessment Management, the following events: for the purpose of defining procedures to optimize • High-level Workshop on Sustainable Banking, a training the social and environmental risk assessment [such as the formalization of procedures with the event for Chinese financial institutions, held in Hong Products – Onlending BNDES area and the back Kong by the IFC together with the China Banking office area responsible for formalizing the contracting Regulatory Commission; of operations in compliance with the social and environmental requirements of the product BNDES • Carbon Financial Instruments – Challenges and Finame, as well as new social and environmental Opportunities for Commercial Banks, Brokers, Asset requirements for requesting the release of funds for Management Firms, and Regional Stock Exchanges; BNDES Automático operations]. • Financing Mechanisms for a Low Carbon Economy, an In 2010, Itaú BBA’s social and environmental risk analysts event held by the IDB; and attended a series of courses, training programs, lectures, and discussion forums and groups, which contributed • Sustentabilidad Ambiental y Mercados Carbono: to empowering the team by improving their knowledge Retos y Oportunidades para el Sector Financiero of relevant issues based on the individual needs of the en América Latina y el Caribe (Environmental management employees. Overall, seven analysts were given Sustainability and Carbon Markets: Directions and this training, which amounted to over 200 hours in courses, Opportunities for the Financial Sector in Latin lectures and other events. America and the Caribbean). 78 Commercial Banking 57 Itaú BBA 78 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 Specialization in the social and environmental theme has provided us with the most prestigious award in the global financial sector: Sustainable Bank of the Year, awarded by the Financial Times and the IFC in the Emerging Markets category. Specialization in the social and environmental theme The way it interacts with clients in these operations may has provided us, for the second consecutive year, with also be divided into: the most prestigious award in the global financial sector: Sustainable Bank of the Year, awarded by the Financial (a) For financing corporate projects, short-term financing of Times and the IFC in the Emerging Markets category. (FS1, structured projects and granting of structured guarantees: FS2, FS3 and FS4) by assessing the project risks and impacts and respective mitigation measures, by using the tools set forth in the Social Social and environmental risk assessment and Environmental Policy, and, when applicable, by verifying IBBA currently carries out, based on conditions and parameters compliance with the requirements defined in regulations it defines itself, the social and environmental risk assessment regarding sources of transferred funds; of clients with loan operations. In 2010, 20% of Itaú BBA’s total assets were subject to this assessment. IBBA has been working toward expanding, in the medium term, its operations as a (b) For long-term project finance: by analyzing the conformity of the projects with the criteria established in the Equator Principles. partner for its clients. It is doing so by identifying sustainable business opportunities, among others, in the climate change Economic groups that may have had indicators described in the and sustainable construction segments. Banned List and/or involvement with them or that performed the activities described in the Restricted List. The way we interact with In relation to 2010, it is possible to divide Itaú BBA’s social clients in these categories may be divided into: and environmental interactions with its clients into two broad activity groupings, as follows: (a) For indicators described in the Banned List and/or the economic group’s involvement with them: through request for Financing of projects and operations related to clarifications on the event, seeking to identify any changes in structured projects (bridge loans and guarantees). the practices by the client; Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 79 Business (b) For practicing the activities on the Restricted List: By the beginning of 2011, the Equity Research team already through an agreement with the client to learn about covered over 130 companies, of which 115 are in Brazil. In their social and environmental risk management Mexico, the coverage reached 21 companies, which were procedures and verifying whether they comply with monitored by four analysts. In Brazil, the team is composed the best market practices. (FS11) of 30 analysts, covering the equity and fixed income markets, in addition to the graphic analysis of the markets. Corretora Itaú BBA The next steps are the expansion of its presence in Mexico The brokerage firm for institutional and foreign clients, and Chile, in addition to the hiring of analysts for other operating under the IBBA brand, was marked in 2010 Andean markets, such as Peru. by the consolidation of its leadership in the Brazilian market and a consistent international expansion. These Products clients stated their opinions through a survey conducted Greater diversification in the portfolio of products was by Institutional Investor magazine, a publication that also required to enable us to serve a widely expanding sets international benchmarks in the segment and that client portfolio. In order to satisfy the needs of these annually surveys managers of funds and foundations and clients, IBBA produces dozens of monthly reports with other institutional investors to find out which firms provide in-depth analysis of companies, providing a broad view the best services. of relevant sectors, in addition to recommendations on the strategy to be adopted given the market On the domestic market, in addition to being performance. In order to help investors in their decision- responsible for the largest operations on the making process, there are also graphic analysis of the BM&FBovespa in 2010, the group’s brokerage firm was market and independent reports – Global Connections recognized by large clients due to the production of and Global Strategy. analytical content on the shares traded in Brazil. In 2009, the brokerage firm acquired a new algorithmic operating system, which enabled much more efficient and optimized handling of large orders on behalf of the clients representing greater distribution capacity and Total companies covered in Latin America expertise in the origination and structuring of variable Brazil 115 income operations. Mexico 21 Argentina 1 Chile 1 International expansion In order to make the international expansion a reality, it was necessary to expand the geographical coverage of the Research team. With four analysts in Mexico, the brokerage firm reaches locations in which other areas of Itaú BBA, as a wholesale bank, does not yet have a representation office. Structure Mexico 4 analysts Brazil 30 analysts* Argentina 2** * Coverage of equities, fixed income and technical analysis. ** In process of expansion. In 2010, IBBA consolidated its international expansion. 80 Commercial Banking 57 Itaú BBA Consumer credit Insurance, private pension and capitalization Business abroad 80 81 84 90 Consumer credit Vehicle financing The vehicle financing operation of Itaú Unibanco is the Growth and innovation largest in Brazil and the world’s second largest by volume The consumer credit segment offers financial products and in the banking sector. In 2010, we recorded the amount services to non-account holders, such as vehicle financing, of R$58.9 billion in loans, distributed across 3.8 million credit cards and loans to low-income consumers (to learn financing operations and representing a growth of 15.2% more about our credit cards, see page 66). in the vehicle portfolio balance compared to 2009. With the growth of the economy, employment and We operate in all segments. We hold a 34.5% market consumption in Brazil, 2010 was a busy year for the consumer share in light vehicles, 25% in the trucks segment and credit segment, in terms of both growth and innovation. the leadership in the financing of motorbikes, with a The strong demand caused leading institutions, such as Itaú 20% market share. Our commercial structures involve, in Unibanco, to increasingly make investments to seek client addition to the branches, Banco Fiat, of which we are the satisfaction and the sustainable growth of operations. controlling stockholder, accounting for 46% of the volume of financed cars in the Fiat dealership network. In addition In the same way that Brazil has changed, the process of to these dealerships, we have over 13,000 accredited granting loans has also been revolutionized, stimulated by new shops, which offer our products to their customers. technologies and the introduction of new customers to the consumer market. Payroll advance loans, for example, have In line with the Todos pelo Cliente attitude, we have made changed the way loans are granted by redirecting the operation investments in convenience and post-sales services. On of credit financing institutions, and the credit card has replaced the website www.itaucred.com.br we seek to provide installment-payment products, such as payment booklets. clients with innovative features, such as carrying out any and all requests related to the client’s contract, from debt This scenario has caused us to divide our operation into five surveys to financing transfers. Our call center has 1,100 business units: Itaucard correntista e não correntista (Itaucard employees who handle over one million monthly contacts, account holders and non-account holders), Hipercard, joint 55% of which are resolved electronically. ventures, Itaucard Lojistas (Itaucard shop owners) and FIC, our partnership with Pão de Açúcar. These activities are in The sophistication of our systems, with a databank that addition to the business as the acquirer of Redecard, which enables us to analyze the credit simply by requesting went through significant changes in 2010 in order to adjust to the client’s Brazilian driver’s license (Carteira Nacional de the new regulatory requirements of the sector. Habilitação), enables quick responses and firm decisions in credit granting. The default rate for the year remained Itaú Unibanco’s agenda for 2010 – to remain unchanged in 2011 stable. In 2010, payments overdue more than 90 days – focuses on the improvement and expansion of operations. represented 2.6% of the total portfolio. By prioritizing our retention of clients, as well as the pursuit of gains in efficiency and service quality, we have managed to An e-learning program on social and environmental improve the results of the operations, which in 2010 accounted policies and practices, aimed at employees of Itaucred for 20% of the bank’s results, 8% more than in 2009. Veículos, is in progress. It will focus on improving the team’s ability to identify any possible risks involved in the We understand that a financial institution must ensure that credit granting process. (FS4) its clients are well informed, properly guided and ready to use credit products. Itaú Unibanco has made efforts to perform this role, bearing in mind the importance of transparency and the Todos pelo Cliente attitude. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 81 Business Online price calculator – Originating from the idea of a group of employees, the online calculator is an innovative tool in the financial market. With this tool, the commercial department has become quicker and more flexible in negotiating a loan with a suitable price for each type of client. Social and environmental management: policies, risk assessment and monitoring The Social and Environmental Policy of Itaucred Veículos – valid throughout Brazil – was implemented to assess the social and environmental risk/impact of the activities of companies requesting credit financing for light vehicles, trucks, buses and road equipment (through leasing, direct consumer credit financing, Finame and consortium), credit analysis for individuals and financing of trucks, road equipment and vans (transportation of passengers and cargo, through leasing, direct consumer credit, Finame and consortium). The policy is based on IFC Standards and the Equator Principles, and the governance body responsible for approval is the Superintendency of Commercial Loans. The policy is not available to the general public. The social and environmental risk analysis is applicable to commercial clients of Itaucred Veículos, either account holders or non-account holders, with credit of at least R$5 million, having as a reference point the existing risks or credit limits available in the conglomerate. When adopted for companies that meet the eligibility criteria, the social and environmental risk analysis is used as a credit mitigating factor. The Social and The online price calculator provides more agility in the negotiation of financing that best suits the client’s profile. Environmental Policy of Itaucred Veículos does not affect the creation of and decisions on future products, but rather the decision on granting credit to companies, by assessing any possible social and environmental risks of approving each operation. Accordingly, Itaucred Veículos shows its care for stakeholders with its concern and transparency responsible social and environmental practices and operations. Research conducted with credit protection bodies and on websites (such as Google and the Ministry of Labor, 82 Commercial Banking Itaú BBA 57 76 Consumer credit Insurance, private pension and capitalization Business abroad 82 84 90 among others), in addition to the possible application • Internally supporting sustainable development programs of a social and environmental questionnaire, are used as and actions and providing guidelines for training the mitigating factors in the credit granting assessment. The personnel of the commercial and corporate credit areas; results of this research, together with other credit factors, influence the bank’s decision of whether or not to grant • Contributing to the commercial clients’ improvement of their credit, therefore leading to greater decisiveness in the social and environmental practices. (FS1, FS2 e FS3) granting of credit. Redecard Also noteworthy is the fact that commercial clients are In Redecard, we have experienced intense activity with the classified, based on their operating activities, by social and new regulation of the sector, aimed at clients, which is now environmental risk level. This classification, which establishes governed by the Central Bank of Brazil. As a market leader, specific rules related to the mandatory performance of social Itaú Unibanco had a proactive role in the development and environmental procedures by Itaucred Veículos, involves of this regulation. And 2010 was a year characterized by five categories: negotiations with stockholders, the government and shop owners, requiring a set of skills we had to develop. • Companies classified under risk A (high risk): if the risk already existing in Itaucred (plus the amount of Redecard used to dominate the market and, with the the proposed transaction) is equal to or higher than opening of the sector to new competitors, the price R$500,000. For companies under the social and competition became a significant component. We have environmental category A, the social and environmental started to operate under the Visa brand and have included questionnaire for specific assessments is applied upon the Hipercard brand in the same platform. credit request; In 2010, the financial volume of credit transactions • Companies classified under risk B (medium risk): if increased 25.6%, whereas the debit volume rose 22.1%, the risk already existing in Itaucred (plus the amount compared to 2009. Net income of R$1.4 billion increased of the proposed transaction) is equal to or higher than 0.3% compared to 2009. R$1 million; Noteworthy is the fact that Redecard was chosen in • Companies classified under risk C (low risk), whether account 2010, for the second consecutive year, for inclusion holders or non-account holders: there is no need for the social in the DJSI portfolio.It joined a select group of 318 and environmental risk analysis; companies from 27 countries, of which only seven are Brazilian – a group that includes Itaúsa Investimentos • Clients included in the Banned List: these clients must not and Itaú Unibanco Holding. carry out loan operations with the bank; China Unionpay • Clients included in the Restricted List: there is nothing to In 2010, Itaú Unibanco entered into a commercial and prevent the bank from operating with these sectors, but the cooperation agreement with China Unionpay Co. Ltd. (CUP), operation must be approved by the Credit Commission. which will enable clients of the Chinese bank to make withdrawals in over 30,000 ATMs of Itaú Unibanco. With its head The main risks and opportunities associated with the credit office in Shanghai, CUP has over 400 associated institutions analysis are as follows: and is present in over 90 countries. Redecard, an Itaú Unibanco Group company, has also entered into an agreement to enable • Establishing guidelines and tools for assessing social and the shops of its accredited network in Brazil to accept the 2.2 environmental risks in the credit granting analysis; billion debit and credit cards issued by CUP. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 83 Business Insurance, private pension and capitalization Strategic restructuring Garantec In 2010, the process of restructuring the insurance, private Garantec, a subsidiary of Itaú Unibanco Holding S.A. which pensions and capitalization sector of Itaú Unibanco works with retail chains in Brazil, maintained its leading kept the aim of better meeting market demands – but position in the extended warranty sector, with a 55.4% without losing the focus on client satisfaction and risk market share from January to December 2010, according to management. data from Susep. In health insurance, during 2010, the Agência Nacional de The insurance provides coverage for electrical, Saúde Suplementar (National Health Agency) approved the electronic or mechanical breakdowns that occur after transfer of 100% of Unibanco Health Insurance’s corporate the manufacturer’s warranty ends, and covers the cost control to Tempo Participações. of labor and parts needed to repair the unit. The main products covered are: household appliances, electronics, The restructuring of the insurance segment also included computer equipment, mobile phones, fitness equipment, the approval by Susep of the purchase of XL SWISS’s stake watches and even furniture. in Itaú XL Seguros Corporativos S.A. by Itaú Seguros. Itaú Unibanco will be the owner of 100% of Itaú XL Seguros In 2010, Itaú Unibanco stepped up its communication Corporativos S.A., thereby maintaining its structure with clients to make this type of insurance, still for catering to large industrial and commercial clients, considered new in Brazil, as popular as it has become in including, among other industries, construction, chemicals the United States. In October, after conducting surveys and petrochemicals, energy and infrastructure. The deal with retailers, sales teams and consumers, Garantec also allowed us to offer innovative products tailored to the changed the spelling of its name – Garantech – and needs of large-scale projects to over 3,000 clients of Itaú adopted a new logo, seeking to convey to the public its BBA. At the end of 2009, Itaú Unibanco sold the 14.03% main attributes of efficiency, closeness of relationships, stake it held in Allianz Seguros S.A., a Brazilian subsidiary of partnership and innovation. the German insurer Allianz. Guarantec’s Garantia Sustentável program The changes have already begun to show results: we In December of 2009, Garantec launched the Garantia became a leader in the insurance sector – taking into Sustentável (Sustainable Guarantee) program, designed account the 30% share in Porto Seguro. The notable to promote the proper collection and disposal of products here include, in the individuals segment, Personal electronic waste. Life and Extended Warranty and, in the corporate segment, Group Life and Corporate Solutions. This program is aimed at collecting batteries and electronic equipment that are broken or no longer being used, such Total revenue from insurance, pensions and capitalization as mobile phones and portable CD players, which can reached R$5.6 billion in 2010, while technical provisions be harmful to the environment because they contain totaled R$60.7 billion. substances that can contaminate soil, water and food we consume. Garantec also encouraged its authorized technical Furthermore, we continue improving our operational assistance providers to use environmentally appropriate efficiency, controlling costs and investing in new disposal methods for old replaced components – such as technologies to increase our productivity, simplify processes, CRTs, monitors and electronic boards. The items collected are eliminate risk,improve our relationships with suppliers and, sent to specialized partner companies, responsible for the most importantly, increase client satisfaction. treatment, recycling and reuse of the materials. 84 Commercial Banking Itaú BBA 57 76 Consumer credit 81 Insurance, private pension and capitalization 84 Business abroad 90 Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 85 Business As a result, this project collected 2.2 metric tons of materials Environmental insurance in 2010 – which represents 0.20% of the total of products Civil Environmental Liability Insurance is part of the product sold with extended warranties by partners in the same portfolio of Itaú Seguros Corporate Solutions. It provides period. Part of the collected material comes from our coverage for both sudden pollution events and for gradual sales, and part comes from voluntary disposals. Today, the pollution events, which represent a broad scope of solutions program is active in 18 cities in the state of Sao Paulo, and for the insured clients. In 2010, our portfolio generated the goal is to extend the initiative to other regions of Brazil approximately R$18.6 million in premiums, with insurance in 2011, considering the public awareness of the need to policies sold mainly in the Southeast of Brazil. minimize environmental impacts caused by waste from electronic equipment. (EN27) This product offers coverage to companies from different sectors, such as chemical, metallurgical, Apólice Eletrônica hospital, steel, pharmaceuticals and automotive, among The Apólice Eletrônica (Electronic Policy) project seeks others. It also helps protect society from risks brought to generate economic, social and environmental on by pollution events. This coverage represents a benefits by decreasing the use of natural resources, and guarantee that there will be funds available to properly mitigating our impact on the environment by reducing remedy damage to the environment and to third parties, paper printing and the materials used in the process aiming at maintaining a standard of environmental of issuing and distributing policies. More information quality and public health protection. about this product is available on the Portal do Segurado (Policyholder Portal) - www.itau.com.br/insurance Therefore, besides the environmental benefits, the (requires login and password). coverage offered also provides social benefits, given that when there is a claim to cover the costs of remedying IBCC Partnership environmental damage, the third party affected can also Part of the income from sales of life insurance for receive support. In line with this, we must understand women is passed on to the IBCC, contributing to that remedies will be applied to an asset that belongs to the work of this important institution in promoting the community – the environment, in accordance with the awareness, diagnosis, prevention and treatment what is established in article 225 of the Brazilian Federal of cancer. Constitution of 1998. Corporate Insurance Solutions Social and environmental insurance management: policies, In 2010, the area of Corporate Insurance Solutions of risk assessment, monitoring and staff training Itaú Seguros S.A. improved its processes, products and The underwriting policy applies to all clients who request structure. The aim was to seek the best performance in these products, and the criteria that are used are similar in meeting the needs of large companies, by providing all Brazilian states. When it comes to environmental risks insurance solutions to major industrial and commercial and pollution, the specifics of each state are addressed on a clients in the construction, chemical and petrochemical, case by case basis. electric energy and infrastructure industries, among others, who play a relevant role in the development of To operate this structure, the Corporate Solutions Brazil. The solutions offered reflect the commitment of our department of Itaú Seguros has professionals with institution to providing insurance to customers who seek extensive experience in underwriting and developing long-term development that is consistent with the kind of civil liability insurance. They also have specific training in economic growth we pursue and capable of maintaining a environmental engineering and civil engineering, graduate harmonious relationship among people, the planet and the training in environmental management, and experience in financial viability of the investments that we support. industrial risks inspections and scheduling environmental 86 Commercial Banking Itaú BBA 57 76 Consumer credit 81 Insurance, private pension and capitalization 86 Business abroad 90 hazards inspections. Outsourced professionals with the claims involving our products and the business training in environmental risk assessment can also be continuity of our insured clients. hired. Internally, there are frequent discussions among the risk underwriters to improve knowledge exchange and Two physical changes that may occur as a result of climate enhance the skills of those involved with the assessment of change, and that receive a lot of attention from the environmental risks. (FS4) insurance company, including in prices, are flooding and storm risks. Given this, the field inspectors always seek to Training needs are assessed internally, by the area analyze such risks, and in their reports ultimately advise the of underwriting in general, and are designed to be insured client or prospective insured client to watch out for offered as either in-company training or external points of vulnerability and to adopt procedures to improve events, with opportunities for training with global controls and risk management measures in their industrial reinsurers. In 2010, around 30 underwriters took a 12- or commercial operation, designating the level of exposure hour training course on civil liability insurance, which as high, moderate or low. For events involving risk of included environmental risks involving environmental storms, heavy rain and flooding, inspections seek to focus, pollution. (FS1, FS2, FS3 and FS4) among other suggested measures, on the insured client’s goods and equipment that are located in outdoor areas Climate change or subject to damage by water, cross-referencing this with As regulations relating to climate change grow data from an analysis of the region’s susceptibility to these worldwide, the market for products with low emissions risks and generating a recommendation if adjustments of GHGs – as well as those developed using new are necessary. The adjustments that may be suggested technologies – increases, and so does the number of are, among others: construction of covered brick areas, companies investing in energy efficiency and allocating construction of wind barriers by planting trees around the resources to clean energy. This situation is the basis of a industrial or commercial unit and strengthening of existing low carbon economy along with the new markets which brick structures. the bank can access. Therefore, the insurance product and the services Itaú Seguros believes that climate change will create a connected with the purchase of such products can framework of risks and opportunities for the insurance positively and effectively influence the adjustments industry, and addressing this aspect of the operation made by clients to natural phenomena resulting from will allow us to handle the company’s current and climate change, protecting their assets and mitigating emerging issues relating to sustainability in the future risks. (EC2) insurance industry more rigor. Support initiatives for clients’ We seek to reflect on and consider climate change insurance programs issues strategically and in view of the future, both in Itaú Unibanco and its clients develop insurance education underwriting and in the development of new products. initiatives that aim to explain the importance of insurance An example of this mindset is the opportunity for products to support, in a complementary and effective alignment with global reinsurers who have expertise on way, the management of business risks. We can mention, climate change issues through the contacts we have with among other things, instructive support on products the insurance and reinsurance markets worldwide. such as Directors and Officers (D&O) Liability Insurance, Errors and Omissions (E&O) Insurance, and Civil Liability Considering this, the physical changes that may arise as Environmental Insurance. The risks covered by these a result of climate change represent potential risks to products are complex, and sometimes go unnoticed by our business and may influence, directly or indirectly, the potential client. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 87 Business Financial education in insurance redemptions and transfers of resources to other entities, The insurance area offers specific training for resulted in outstanding net funding when compared to the prospective client companies and brokers about overall corporate pension market. innovative insurance products such as Environmental, The assets portfolio of Itaú Vida e Previdência contains the D&O and E&O. fund Unibanco Previdência Corporate Responsabilidade Social In this training program we explain the risk types that (Unibanco Previdência Corporate Social Responsibility). these products are intended to cover, and clients are This fund can invest up to 49% of its portfolio in shares of advised about the potential risks that may be part of their companies listed on the ISE of the São Paulo Stock Exchange operations and that could be addressed through adequate (Bovespa), and the remainder in fixed income securities. insurance coverage. (FS16) During 2010, the measures that focused on the quality of Pension customer service featured prominently. Because of them, Itaú Unibanco has reached R$51.4 billion in total pension Itaú Vida e Previdência was named The Company with the reserves in 2010, with R$41.9 billion in plans for individuals and Most Respect for Consumers, an award sponsored by the R$9.5 billion in corporate pension plans. Consumidor Moderno (Modern Consumer) magazine, in the Private Pension category. The main aspects that were For the individual pension plans, the business strategy is based analyzed were quality of customer service – encompassing on financial consulting, while observing the profile and needs the entire contact cycle – as well as product quality, company of the clients to maximize the tax benefits in the existing image, price and differentiators in the area of social and pension plans. environmental responsibility. Product innovation has been important for the sustainable Capitalization growth of the pensions for individuals, and we have plans In 2010, sales reached approximately R$1.8 billion, with whose investment policy stands out from others available technical reserves of around R$2.6 billion. in the market. One highlight is the Flexprev Índice de Preços (Flexprev Price Index), which invests primarily in bonds Itaú Unibanco takes part in environmental and social linked to the National Broad Consumer Price Index (Índice responsibility initiatives which transfer resources from sales of Nacional de Preços ao Consumidor Amplo ) and whose various products, primarily capitalization certificates. coupon payment periods exceed five years. Another unique product is Flexprev Valor (Flexprev Value), which invests part The partnership with the AACD was established in 2007 with of its resources in shares that, in the opinions of specialized the capitalization plan from Unibanco and was extended on managers, have more chances of appreciating in value July 1, 2010 to include the capitalization plan from Itaú. according to the analysis of the company fundamentals. In December 2010, Flexprev Turbo RF, another groundbreaking From January to December 2010, the AACD received product, was launched. This is a fixed income fund investing in R$2.1 million from Itaú Unibanco. The institution promotes fixed rate and floating rate securities, aimed at beating the IMA rehabilitation and social inclusion for people with physical Geral index (excluding bonds pegged to the IGP-M index). disabilities throughout Brazil. In corporate pension plans, the fundraising highlight was the achievement of significant transfers from other private pension organizations and a consistent rising trend in sales revenue from its existing portfolio of clients. This trend, combined with a successful strategy for retention of 88 Commercial Banking Itaú BBA 57 76 Consumer credit 81 Insurance, private pension and capitalization 88 Business abroad 90 Our target is to reach a leadership position in Latin America: we are a Brazilian bank with Latin American aspirations. Itaú Branch in Argentina Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 89 Business Business abroad In 2010 Itaú Unibanco entered into a partnership with BNDES for the creation of a credit line aimed Focus on Latin America at fostering Brazilian exports to the Mercosur The international presence of Itaú Unibanco has been countries. The project started with Argentina increasing year after year, particularly in Latin America. A but we intend to expand the credit to the other little more than 10% of our earnings are already generated countries in the region where we already operate, abroad. Today, the institution has retail and private banking such as Chile, Paraguay and Uruguay. Given the operations in many South American markets such as expertise of Itaú Unibanco in Latin America, mainly Argentina, Chile, Paraguay and Uruguay. The bank also in the small and medium-sized company niche, the operates in North America, Europe and Asia, where it carries bank led the structuring of this credit line along out corporate and private banking, brokerage and asset with BNDES. This is why we were the first institution management operations. to offer the product. In 2010, virtually all our foreign units underwent reformulations Argentina as a result of Brazil’s positive image abroad – where it is seen In 2010, the main innovation of Banco Itaú Argentina as one of the most promising emerging countries – and also in the corporate segment (micro, small, medium and as a result of the internationalization of Brazilian companies. large companies) and individual segment was the Our units are strategically located, particularly the European launch of Itaú Personnalité, a strategy through which operations, with units in Portugal, England, Spain, France, we provide a differentiated model of service. The bank Germany, Luxembourg and Switzerland. also made a strategic alliance with TAM Airlines to offer Argentine costumers a co-branded credit card. And in Itaú Unibanco offers foreign institutional clients a the last quarter of 2010, Banco Itaú Argentina entered complete package of products and services, such as asset into an important commercial agreement, which will management, fund management, custody, alternative allow for an increase in the client base by launching a products, equities, fixed income, foreign exchange, co-branded card. guarantees and treasury products. Foreign institutional clients are served by specialized staff composed of In Argentina, Itaú Unibanco has a network of 81 branches professionals of different nationalities as well as by and 1,514 employees. The main products offered to relationship managers based in our units in New York, individuals are savings accounts, personal loans and London, Hong Kong, Tokyo and Dubai. credit cards. For corporations, the bank offers financing, treasury products – such as derivatives and foreign Southern Cone exchange – and syndicated loans. Our aim is to be the leading bank in Latin America in the near future: we are a Brazilian bank that has Latin Total assets amounted to R$2.3 billion in 2010 and American aspirations. Our strategy is based on the income before taxes was R$1 million. We highlight the idea that we have to make clients who are searching fact that we needed a lower provision for loan losses in for financing services in the region think of Itaú the period. Unibanco first. In 2010 we prepared to reach this target, disseminating Itaú Unibanco’s new vision, Nosso Jeito de Chile Fazer, and the Code of Ethics to all our units. In Chile, Itaú Unibanco operates in the corporate segment (micro, small, medium and large companies) In 2010, the credit card clients were able to enjoy events and the individual segment focused on medium and and promotions, such as discounts in many establishments high income clients, offering them a wide range of and the summer event that took place in Punta Del Este. products. This unit has more than 2,000 employees. 90 Commercial Banking Itaú BBA 57 76 Consumer credit 81 Insurance, private pension and capitalization Business abroad 84 90 The growth of the Chilean economy resulted in some Total assets amounted to R$3.6 billion and net income important actions by Itaú Unibanco in Chile in 2010. Two was R$54 million. Increased earnings from credit card and branches were opened, bringing the total to 75. The ratings pension fund operations, in addition to the need for a lower agency Moody’s attributed an A3 (“upper-medium grade”) provision for loan losses, were the highlights. foreign currency rating to Itaú Unibanco in Chile, providing further access to the network of external financing. Paraguay The high point in 2010 in Paraguay was the change The rating, together with the prestige and reputation of Itaú from the Interbanco brand to the Itaú brand. After the Unibanco in the foreign markets, helped the bank obtain change, which took place on July 12, 2010, the bank a syndicated loan of US$200 million, initially provided for started to use the same brand in all regions where it at US$150 million, maturing in two years and contracted operates. In Paraguay, Itaú Unibanco has a service under very favorable conditions. The funds will be used structure in the individual and corporate segments to further leverage our growth in that country, which is (small, medium and large companies, agribusiness, and already twice as high as that in the financial system. institutional clients), in addition to 19 branches and 517 employees. Our target is to grow 50% above the market average and consolidate our leadership in the ABC1 segment Credit cards play a very important role for us in the (the middle class as classified by the British National generation of income in Paraguay. In 2010, the institution’s Readership Survey), with a market share of 18%. The total assets amounted to R$2.3 billion, with a special bank is also concentrated in the corporate segment highlight on the growth in loan operations, mainly in the in Chile, especially the niche of small and medium- corporate portfolio. Net income totaled R$94 million in the sized companies, as well as the private banking and year, helped by the growth of the portfolio. However, these investment banking operations. results were affected by non-recurring expenses arising from the change of the brand. Another achievement was the launch of the university loan in the Chilean market, which has significantly contributed Europe to the growth of the institution’s retail portfolio in Brazil. The banking activities of Itaú Europe are developed In 2010, total assets of Itaú in Chile amounted to R$12.3 in Portugal, England, Luxembourg, Switzerland, Spain, billion, whereas the loan portfolio totaled R$9 billion, France and Germany and are mainly focused on representing a 21.26% increase over 2009. Net income was international corporate banking, capital markets and R$169 million, with an emphasis on the growth of the loan private banking activities. The work is conducted in portfolio and the results of a better credit granting process, close cooperation with the institutions and areas of the which is responsible for reducing the default rate for loans conglomerate that coordinate these activities in Brazil. overdue for more than 90 days. In 2010, we started our operations in Zurich, Switzerland. Uruguay This subsidiary, which is linked to the holding company, In Uruguay, Itaú Unibanco operates in the corporate and will operate in the private banking segment and its main individual segments by means of 21 branches, two of objective is to serve Brazilian and Latin American clients which were opened in 2010. The main products offered seeking global investment opportunities. are credit cards, cash management, trade financing, investment services and private pension funds. In 2010, The consolidated assets of Itaú Unibanco’s operations in we became the Visa billing market leader and entered Europe totaled R$12.7 billion, and managed assets from into a partnership with Telefônica Movistar to issue the the private banking segment amounted to R$21.1 billion. Movistar Itaú credit card. Net income was R$96 million on December 31, 2010. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 91 Relationships Relationships Transparent and long-lasting relationships • Employees • Clients • Stockholders • Suppliers • Government • Media and Public Relations The development of sustainable management requires transparent relationships and open dialogue between an organization and stakeholders. • Environment Itaú Unibanco is increasingly concerned about developin lasting relationships with clients, employees, suppliers, stockholders, media, government, and society as a whole by means of transparent practices. The bank believes that, to be an organization that creates value, long-term relationships must be developed. This can be achieved through communication channels that are always evolving, a willingness to listen and evaluate the requests of all stakeholders and the development of policies and strategies that can lead to the improvement of services, products and processes.. (Labor Management Approach) Transparency is also fundamental to ensure that our clients receive proper treatment in their relationship with the bank, that employees On the website Todos pelo cliente, Liderança Ética e Responsável, Carteirada não Vale and Brilho nos Olhos. These are four of the 10 attitudes of Nosso Jeito de Fazer, which you will get to know in detail by visiting the website of the Itaú Unibanco Annual Sustainability Report. Visit also the chart with the number of employees in Itaú Unibanco’s workforce in each region of Brazil in addition to details on the Prêmio Todos pelo Cliente and the organization’s occupational safety and health program. are able to perform their work according to the principles and ethical values we want to undergird our growth, and that our suppliers, partners and stockholders trust the company and its accountability. Itaú Unibanco has made a commitment to influence society in general by promoting social investment actions to improve education and increase cultural access. By fully understanding how its operations impact – directly or indirectly – the environment, the bank contributes to a better use of natural resources. (Sector Management Approach) On the iPad and in the Magazine Read the box that describes the seven behaviors highlighted in the Guia Todos pelo Cliente (All For The Client Guide), such as “Trate o cliente como você gostaria de ser tratado” (Treat the client the way you would like to be treated) and “Entenda as necessidades do cliente e surpreenda-o, indo além do que ele espera” (Understand the client’s needs and surprise them by surpassing their expectations). In the section “Our concern about climate change”, see the article “De olho na sustentabilidade”. Relationships Employees Local hiring Valuable professionals2 Although Itaú Unibanco does not have a formal policy Valuing human capital is one of the priorities of Itaú People united by a new culture Three months after the launch of Nosso Jeito de Fazer, we for filling vacancies with residents of the communities in Unibanco’s management and sustainable performance “To be a leading bank in sustainable performance and client conducted a survey to assess the practical application of the which it operates, it does adopt practices for local hiring. strategy. In 2010, we completed the consolidation satisfaction.” (Profile 4.8) The new vision of Itaú Unibanco, ten proposed principles. Some 54,000 employees participated Of the 15,853 members of senior management – positions of the partners and associates program, through disclosed at the beginning of 2010, is quite challenging, and (60% of the total), which permitted us to identify strengths concentrated in Central Administration Offices, located which high-performing employees who think in an for us to reach it, it is essential that all employees are in line and issues for improvement. in the capital city of São Paulo – 82% come from the local institutional way and are a model of adherence to community, that is, from São Paulo. (EC7) the conglomerate’s values, as well as an example of with our values and principles. One of the most important achievements over the year was the strategy to encourage the In addition to this initiative, a number of in-house leadership and management, can advance further in engagement of leaders so the new organizational culture can communication actions focused on employees contributed their careers. (Labor Management Approach) be disseminated among all staff members and bring benefits to a better understanding of the attitudes. Through practical for both the bank and its clients. examples published in the newsletter, culture quizzes and the hotsite of Nosso Jeito de Fazer, people were enabled to better Total number of own employees, by region (in Brazil) (LA1) The appointment of partners and associates considers the performance measured by the Strategic Planning for understand the meaning, the advantages and what the bank Region 2,010 Personnel (Planejamento Estratégico de Pessoas – PEP), expects to achieve with the adoption of Nosso Jeito de Fazer. South 9,341 launched in 2009, and how these professionals spread the Southeast 81,269 principles and values of Itaú Unibanco to their teams. set of ten attitudes that will enable us to achieve further goals In March 2010, we started the Portas Abertas program, which Center-West 3,962 in the future. These principles – also internally known as the organizes conversations without any set agenda with Roberto Northeast 6,530 These professionals may invest a percentage of their 10 Commandments – were launched in February 2010 at the Setubal (CEO), Pedro Moreira Salles (Chairman of the Board North 1,214 bonus in Itaú Unibanco shares, and, in doing so, receive Encontro entre Líderes, which took place in the city of São Paulo. of Directors) and Ricardo Marino (one of the Directors). These Total 102,316 a consideration from the company. As a result, their Since then, everybody has been responsible for putting them discussions are intended to bring different hierarchical levels commitment to long-term sustainable results and into practice. closer together and stimulate the exchange of experiences alignment with the stockholders’ interests are constantly and suggestions so that we can achieve the vision of Itaú strengthened. Participating in the program means This clear vision represents the long-term commitment made by Itaú Unibanco to clients and society. The way to comply with this commitment is summarized in Nosso Jeito de Fazer, a Consolidating the new vision and involving all employees Unibanco by practicing Nosso Jeito de Fazer. Over the year, is not an easily or quickly performed task, but 2010 235 employees participated in the program, in 16 groups that allowed us to obtain satisfactory results towards it. contributed with more than 30 different ideas that are already Specific awareness programs designed for the main being addressed by the company. continuously building and improving the conglomerate’s Itaú Unibanco in the fight against corruption culture and performance. In 2010, the monitoring routines for assessing All employees of Itaú Unibanco (own employees, based in leaders were carried out for the new organizational risks related to corruption were applied only to Brazil) are included in the performance evaluation model. culture to be learned and spread. The action of the Nosso Itaú Unibanco S.A. These risks are specified in the Of all the employees: Jeito de Fazer Map, for example, had the participation Corporate Policy of Combating Corruption and of approximately 9,600 employees by December 2010. Holding company’s total number of employees (LA1) We also organized the Nosso Jeito de Fazer workshop, Bribery (HF-22), which regulates corruption together • approximately 35,000 are in the Performance with the Code of Ethics of Itaú Unibanco. Over the Management Program; which was designed for officers and superintendents and Hierarchical level 2010 year, neither employees nor managers were trained involved 96% of these employees. Management 15,853 in policies and procedures combating corruption in • the others are included in programs such as AGIR Administrative 52,616 the organization. Corruption and bribery offenses (network of branches and commercial departments) The new organizational culture was also conveyed to all Itaú Production 39,403 were neither reported nor investigated, and there or proprietary programs for performance evaluation, Unibanco employees abroad. This process was conducted Trainees* 168 were no lawsuits against the organization or its considering the specific nature of the business. by means of experience and knowledge exchange programs Total 108,040 employees. (SO2, SO3 and SO4) between the units and the parent company, and the * From 2009, the Trainee group was excluded from the Administrative total. For 2009, the name of the process was changed participation of employees in training programs organized from Performance and Goal System to Performance in Brazil and abroad, following a global strategy but Management Program. (LA12) respecting local abilities. (Think globally, act locally). (Labor Management Approach) Companies considered for this report (limit):Itaú Unibanco, Hipercard, Itauprev, Itauleasing, Itaú Unibanco Holding, Banorte, Megabonus, Microinvest, Dibens, Provar Negócios, Luizacred, Financeira Itaú, Maxfacil, Fináustria Part, Fina Prom Servs, Banco Fiat S.A., Trishop, Fic Promotora, Facilita, Fai, Total Serviços, Itaú Seguros, Itauseg Saúde, Orbitall, Kinea, Banco Itaucard, Icarros Ltda., Dtvm, Pro-Imóvel, Marcep and Unibanco Prev. 2 Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Employees Clients Stockholders Suppliers Government Media and Public Relations Environment Relationships Young talents In essence Another Itaú Unibanco initiative in connection with relationships with employees is searching for and valuing young professionals who prove themselves to Stakeholder engagement be capable of and willing to develop their professional career at the bank. In 2010, the Trainee Program had in our strategy to mobilize and promote awareness among our different stakeholders... a 95% retention rate – whereas the market average is 70% – and it received applications from approximately 35,000 applicants. The bank selected and hired 87 young ...we consult with stakeholders in panels, we implemented the Portas Abertas Program, we organize Client Forums and make a communications channel available to our suppliers on the Internet. people who had graduated between 2007 and 2009, in a selection process that directly involved 70 leaders of the company. The strong competition by recent graduates – 427 candidates per position, or 43,359 applicants in 2010 – is also the result of a campaign developed by Itaú Unibanco to show young people that a financial institution needs to bring together different professional profiles. Walther Moreira Salles Award With the motto What are you made of?, the bank’s information campaign focusing on trainees and interns Meritocracy is an important principle in the showed professionals working in areas quite different from construction of an environment in which those traditionally imagined in a bank – this is, trading transparency, respect and valuing employees prevail. desks and bank branches. Attracting attention through At Itaú Unibanco, the Walther Moreira Salles Award social networks and media favored by young audiences, is an acknowledgment of efforts in the pursuit of the campaign also promoted the importance of the 2010 sustainable performance. Internship and 2011 Trainee programs. In 2010, Itaú Unibanco organized the 10th edition of The 2011 Trainee Program, whose selection process was the award, which acknowledges outstanding actions conducted in 2010, received a record 43,549 applicants, a and projects. In this edition, some 400 projects were 28% increase compared to the previous year. We had 298 submitted in five categories – Sustainability, Innovation, finalists, from which we hired 106 trainees. Efficiency, Service Quality and People Management. The young employees have the opportunity to take part in The award ceremony was held at Sala São Paulo. The a number of qualification and professional development winners received, in addition to trophies, shares in programs, the purpose of which is to prepare them to hold Itaú Unibanco. positions of leadership in the future. Created in 2000, the award’s name was inspired In 2010, for the second consecutive year, we were the by the ambassador Walther Moreira Salles, the only financial institution listed among the ten main founder of Unibanco, who always made a point of companies in Brazil where young people dream of considering people the most valuable asset of an working. The survey, conducted by Companhia de Talentos organization. (Company of Talents), interviewed over 35,000 university students throughout Brazil. 96 Relationships 96 Clients Stockholders Suppliers Government 100 112 113 116 Training and qualification Itaú Unibanco offers its employees training in its social and environmental policies and practices, and encourages participation in public events, forums, courses, lectures and discussion groups in relation to such topics. There are specific and general training courses, conducted both internally and externally. They are available to staff engaged in social and environmental risk analysis, allocated in various departments of the bank, and aim to qualify them to better identify these potential risks as part of the decisionmaking process involving investments, financing and credit granting. (FS4) (Labor Management Approach) Corporate training – average hours per training course, per year* (LA10) 2010 Executive Management Administrative Production Board Total Number of hours for training in Personnel Management 0 65,323 20,144 472 85,939 Number of hours for training each employee by functional category (other corporate training) 24 268,813 1,135,943 562,238 1,966,994 Number of trained employees 5 14,032 49,253 36,149 99,439 * Companies considered for this report (limit): Itaú Unibanco, Hipercard, Itauprev, Itauleasing, Itaú Unibanco Holding, Banorte, Megabonus, Microinvest, Dibens, Provar Negócios, Luizacred, Financeira Itaú, Maxfacil, Fináustria Part, Fina Prom Servs, Banco Fiat S.A., Trishop, Fic Promotora, Facilita, Fai, Total Serviços, Itaú Seguros, Itauseg Saúde, Orbitall, Kinea, Banco Itaucard, Icarros Ltda., Dtvm, Pro-Imóvel, Marcep and Unibanco Prev. E-learning program in sustainability Financial education for employees In 2010, 207 employees enrolled in the Itaú As a way of managing indebted employees, the bank provides Unibanco e-learning program in sustainability and the Guide For Managers – How to Address the Topic with the underwent 103 hours of training. The bank’s goal Employee. It also prepares reports to support the management for 2011 is to launch the same e-learning program (officers and superintendents), with case studies on the following in English and Spanish in the first half of the year. situations: at least one bank product on which payment has been (Profile 4.16) overdue for 60 days or more, in an amount equal or higher than R$200, and/or inclusion on a bad debtor list (the credit reporting In 2009, an e-learning program on social and bureau Serasa, financial institutions, retailers, etc.). environmental risk was developed and made available to the commercial and credit analysis The program was launched in 2007 and its purpose is to make department. This program, which lasts just 30 employees aware of the proper use of credit facilities and to minutes, is on the institution’s course schedule enable managers to take preventive action in cases of employees and is available to new employees. At the facing financial problems. beginning of 2011, the course was reviewed to be made available to the other employees, who In 2010, as a preventive measure, managers were sent notices cannot access it yet. (FS4) with guidance on the judicious use of money. And a review of the Manager’s Guide is scheduled for 2011. The employees’ training base is also being reviewed, so as to adapt the content to each Itaú Unibanco also addresses the issue of financial guidance in individual’s needs. In 2010, all of the bank’s the induction program for new employees. (FS16) analysts attended the social and environmental risk event offered by the Brazilian Federation of Diversity and human rights Banks (Federação Brasileira de Bancos – Febraban) The plurality of opinions, cultures, origins and ethnic groups in partnership with the IDB. (FS4) among employees is valued and encouraged at Itaú Unibanco, since it contributes to the durability of the organization. Therefore, in 2010 we dedicated even more attention to the topic of diversity, by launching the Valuing Diversity Policy. We have also resumed an important governance action in the diversity area: the Committees for Gender and People with Special Needs. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations Environment 117 119 97 Relationships In essence Total employees by gender* (LA13) Women Men Total 2010 % 2010 % 2010 Board of Directors 0 0% 17 100% 17 Statutory officers 13 7% 177 93% 190 1,430 71% 584 29% 2,014 825 54% 709 46% 1,534 Apprentices Interns Total employees by gender* (LA13) Women Men Grand total 2010 % 2010 % 2010 % Management 6.572 6.08% 9.281 8.59% 15.853 14.67% Administrative 29,932 27.70% 22,684 21.00% 52,616 48.70% Production 26,153 24.21% 13,250 12.26% 39,403 36.47% 53 0.05% 115 0.11% 168 0.16% 62,710 58.04% 45,330 41.96% 108.040 100% Trainees Total Diversity Seeking to increase the plurality of points of view, ethnic groups, cultures and origins of our employees... ...in 2010 we dedicated even more attention to the topic of diversity, by launching the Valuing Diversity Policy. We have also resumed the Commissions for Gender and People with Disabilities. To expand the internal scope of the new policy, Itaú Unibanco structured its actions in three pillars: Inclusion, Culture and Business. Each column is represented in the Executive Committee by one ambassador. (Human Rights Management Approach) Total employees by age group* (LA13) Below 30 years old Board of Directors - Statutory officers Between 30 and 50 years old Over 50 years old Total 2010 % 2010 17 0% 1 6% 16 94% Governance body: Of the 17 members of the Board, 16 are over 50 years old and only one is between 30 and 50 years old. - 0% 112 59% 78 41% 190 Apprentices 2,014 100% - 0% - 0% 2,014 There are no women or black directors, nor people with special Interns 1,533 100% 1 0% - 0% 1,534 needs. All units within the holding company were considered for the 2010 information. Communication channels Listening to the employees and being aware of areas for Total employees by age group* (LA13) improvement is one of Itaú Unibanco’s most effective Below 30 years old Between 30 and 50 years old Over 50 years old means of enhancing its management and strengthening Total its relationships with internal stakeholders. Accordingly, the 2010 % 2010 % 2010 % 2010 % Management 1,163 1% 12,703 12% 1,987 2% 15,853 15% various communication channels of the institution are always Administrative 17,106 16% 31,645 29% 3,865 4% 52,616 49% being updated, evaluated and changed, so as to contribute to Production 23,841 22% 13,769 13% 1,793 2% 39,403 36% a better performance. 166 0.2% 2 0% - 0% 168 0% 42,276 39% 58,119 54% 7,645 7% 108,040 100% Trainees Total employees Complying with the principles of confidentiality, neutrality and independence, the role of Itaú Unibanco Ombudsman’s * Notes: All units within the holding company were considered in 2010. From 2009, the Trainee item was excluded from the Administrative total. Office is to contribute to the consolidation of ethical and 98 Relationships 98 Clients Stockholders Suppliers Government 100 112 113 116 In 2010, we had 4,113 employees with disabilities, which is equivalent to 4.5% of our staff. transparent practices, acting as the main communication Following the disclosure of the results, the participation channel through which the employees may submit questions of the employees was also essential for the continuity of and report misconduct. the activities related to the survey. A total of 330 working groups were organized to formulate improvements for their In 2010, the service received 2,545 contacts, comprising complaints, respective executive boards and areas. suggestions and accusations. The Ombudsman blog, which shares corporate topics with all employees, recorded over 37,000 hits. Another important tool for Itaú Unibanco to understand, listen to Banco de Ideias Sustentáveis and approach employees is the Fale Francamente climate survey, which was last released in October 2010. Participation is voluntary BIS, whose second edition occurred in 2010, is an and the survey was completed by 86% of the employees (about online platform in which all employees can submit 94,000 people). Fale Francamente permits important decisions to one or more proposals that are in line with the eight be made in relation to the internal stakeholders. (Profile 4.4) topics of the bank’s Essência da Sustentabilidade. In January 2010, the bank disclosed the results of the previous In 2010, 1,142 ideas were registered with BIS. The survey, in which over 70,000 employees took part (79% finalist suggestions, chosen by employees and participation rate). In this survey, there was a 69% satisfaction level by the Analysis Committee, were published on regarding the company and 73% regarding the managers. The a hotsite and on a blog, in which it was possible assessment was supported by the consulting services of the Great to make comments or new suggestions on the Place to Work Institute. selected suggestions. Itaú Unibanco Holding S.A. Relatório Anual de Sustentabilidade 2010 Media and Public Relations Environment 117 119 99 Relationships Clients Itaú Unibanco in the complaint ranking of the Central Bank and Procon in 2010 Long-term partnerships To maintain a long-term relationship and meet the client’s Itaú Unibanco was ranked second in client complaints expectations, Itaú Unibanco values ethics and transparency in 2010, according to the accumulated monthly above all. Therefore, it is important that financial education rankings released by the Central Bank. The ranking programs and effective communication channels are considers only banks with more than 1 million clients. constantly improving, thereby promoting the conscientious Itaú Unibanco had 2,830 complaints during the year. use of money and assuring the clients’ complete satisfaction. 51% (1,432) of these complaints were accepted, reaching a rate of 0.58. For Itaú Unibanco, it is not enough just to think about the client. It is necessary to think as a client. This focus is a pillar In 2010, we had 25 administrative proceedings settled of management and responsibility in all the bank’s areas, with the payment of fines, issued by Susep. In total, not only in those in which there is direct contact with there were 22 complaints, two petitions and one these stakeholders. infringement notice. In 2010, this commitment became even more explicit with the In the complaint ranking of Procon São Paulo in 2010, announcement of the Corporate Vision – “To be the leading Itaú Unibanco was also ranked second, achieving an bank in sustainable performance and client satisfaction” – important reduction of 24% in the number of complaints and the new organizational culture, which is an important as compared to the 2009 ranking (from 2,258 to 1,708). motivation for employees to review their everyday actions and reflect on how small changes may reduce the number of These figures were recorded in the period in which the complaints, increase satisfaction and win clients’ loyalty. (PR5) network of 1,000 branches of Unibanco was integrated with the Itaú platform, when 150 new branches were The pursuit of client satisfaction requires cutting-edge technology, opened, in addition to the significant expansion of the a willingness to innovate and the effort to put into practice the credit segment. These were initiatives of great complexity values we believe in. A practical example of this pursuit occurred and scale, particularly in an institution that became in 2010, when all of the executive boards of Itaú Unibanco among the largest in the world after the merger. (PR4) incorporated goals related to client satisfaction and the reduction of complaints. The weighting of the goals varies among officers and superintendents and they are weighted according to the activity and impact that these goals have on clients. Accordingly, the action goals are spread across all business and support structures. (PR5) (Product Management Approach) The pursuit for client satisfaction requires cutting-edge technology, a willingness to innovate and the effort to put into practice the values in which we believe. 100 100 Relationships 94 Clients 100 Stockholders Suppliers Government 112 113 116 Number of accepted complaints1 (PR4) Itaú in the accumulated monthly complaint rankings released by the Central Bank in 20102 4,000 3,000 2,000 0.69 Banco do Brasil -58% 0.58 Itaú Unibanco 3,378 3 1,000 1,432 Reclamações Procedentes 0 2009 0.44 Bradesco HSBC 0.31 Santander 0.30 Caixa Econômica 2010 Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations Environment 117 119 0.21 Notes: 1 – Claims in which non-compliance by the institution with the regulations of the National Monetary Council or the Central Bank of Brazil was proven; 2 – Number of complaints accepted divided by the number of monthly clients protected by FGC, multiplied by 100,000 (base 2010); 3 – The number of complaints accepted in 2000 covers those attributed to Itaú and Unibanco. 101 Relationships Ranking of companies with the most complaints at Procon São Paulo in 2010 Rank Supplier 1.º TELEFÔNICA 2.º Grupo: ITAÚ UNIBANCO Resolved Rejected Total Change 2010/2009 2.275 862 3.137 -80% Rank 2009 1.º 825 883 1708 -24% 2.º 3.º Grupo: BRADESCO (Inclusão do Banco IBI) 632 522 1.154 -27% 7.º 4.º SAMSUNG 868 114 982 207% 20.º 5.º CLARO 711 223 934 3% 6.º 6.º ELETROPAULO METROPOLITANA 249 614 863 -36% 3.º 7.º CELULAR SONY ERICSSON 424 386 810 -37% 4.º 8.º LG ELETRONICS 459 321 780 341% 30.º 9.º Grupo: SANTANDER/REAL 145 550 695 6% 19.º 10.º Grupo: NET 393 299 692 72% 17.º 11.º Grupo: OI CELULAR 307 361 668 5% 11.º 12.º POSITIVO INFORMÁTICA S/A 566 82 648 258% 28.º 13.º TIM CELULAR 306 271 577 -48% 5.º 14.º CASAS BAHIA 295 276 571 113% 24.º 15.º Grupo: CARREFOUR 98 433 531 20% 15.º 16.º NOKIA DO BRASIL 130 385 515 12% 14.º 17.º Grupo: BANCO DO BRASIL 97 354 451 2% 25.º 18.º Grupo: EMBRATEL 390 46 436 -37% 10.º 19.º Grupo: MICROCAMP 238 169 407 -7% 16.º 20.º Grupo: PANAMERICANO 94 308 402 -35% 12.º 21.º Grupo: B2W 220 103 323 80% 29.º 22.º Grupo: CITIBANK 113 195 308 -41% 13.º 23.º BANCO BMG S/A 119 187 306 12% 23.º 24.º Grupo: PONTO FRIO 100 204 304 82% 33.º 25.º VIVO S/A 229 51 280 -30% 18.º 26.º Grupo: MABE/GE/DAKO/CONTINENTAL 239 40 279 163% 42.º 27.º ELECTROLUX DO BRASIL 224 54 278 66% 32.º 28.º LOJAS MARABRAZ 200 39 239 123% 41.º 29.º MOTOROLA 72 165 237 31% 27.º 30.º CAIXA ECONÔMICA FEDERAL 64 164 228 -9% 26.º Source: Procon In 2010, the insurance segment recorded 25 administrative proceedings conglomerate accepted the DPDC goals. These goals were settled with the payment of fines, issued by Susep. In total, there were proposed based on the figures from the 2009 National 22 complaints, two petitions and one infringement notice. Reference File of Accepted Complaints, which consolidate data from Procons integrated with the National System of Public commitment to client satisfaction Consumer Protection Information (Sistema Nacional de In 2010, Itaú Unibanco made, through the Public Indicators Informações de Defesa do Consumidor – Sindec). project of the Ministry of Justice’s DPDC, a social commitment to improving in relationships with clients. For Itaú Unibanco, the The three commitments accepted by the institutions were: DPDC project is a consumer relations policy that significantly • Reduction in the number of complaints, that is, reduction in benefits all consumers, in addition to assisting the companies to the total number of consumers who need to turn to Procons improve their operations and operating indicators. to solve their issues with the companies; By adhering to Public Indicators – together with other • Increase of solutions through prior notices, known as CIPs; and companies in the financial and other sectors – the 102 Relationships 94 Clients 102 Stockholders Suppliers Government 112 113 116 In 2010, we made a commitment, by means of the Public Indicators project, to society in general, to promote improvements in the relationship with our clients. • Increase in settlements in complaint administrative proceedings, usually solved in hearings. In search of excellence in services Aiming at the quality of services and reduction in the number of complaints to the consumer protection agencies, the institution developed In December of the same year, the Ministry of Justice a number of work fronts and adopted the following initiatives: (PR5) published the results for the first 12 months of the project. Itaú Unibanco showed the best performance among 1 - Working with the consumer protection agencies banks in the indicator Increase of Problem Resolution in Working in partnership with the consumer protection agencies is the preliminary phase, achieving a resolution rate of 79.1%. crucial to understanding the issues more clearly and internalizing This rate exceeded the 75% target established for 2010 them. This will enable us to adopt corrective measures in our and also showed progress in relation to the performance processes, products and services, improving the quality of service. of 69% registered in 2009. Regarding the results achieved for the indicator Reduction of Procon Services, we had the The relationships developed with the consumer protection agencies third best performance among banks. The number was have provided input for a number of improvements that have been practically unchanged in the comparison between 2010 devised and implemented, both in direct contact with Procons and 2009 (1.4% growth in relation to the previous year). and in the organization’s products and services, in addition to the Regarding the indicator Increase of Resolution in Hearings, preventive approach of protecting the consumer. There is a clear we reached 65.1%. Although we did not achieve the awareness about consumer rights and responsibilities, a task that proposed goal of 70%, the performance was better than in increasingly demands that companies, society and government pay 2009, when the institution reached a 64% success rate in special attention to consumer relations. The main activities carried this indicator. (PR5) (Society Management Approach) out for this purpose are: (Product Management Approach) Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations Environment 117 119 103 Relationships • Strengthening the work of the relationship advisors 2 - Reduction of complaints in the consumer protection agencies, covering the The reduction of complaints and the resolution of issues following aspects: contribute to the promotion of client satisfaction. For this reason, a number of initiatives are being adopted for – representing the conglomerate before the agencies, this purpose: aiming at discussing the required progress, the improvement of services to the Procons, reduction in Institutional Agenda for Improvement: based on the claims, minimization of the impacts of the merger and main reasons for complaints detected in the in-house the involvement of these agencies in the assessment of communication channels and in the consumer protection new products; agencies, improvement plans were developed in the business units, aimed at streamlining processes, products, services and – representing the clients before employees and the customer service. corporate structure’s areas, aiming at conveying the main expectations of the consumer representative Institutional projects: supplementing the actions developed bodies to the company. Additionally, strengthening the in the agenda, projects focusing on customer service issues local relationships with Procons and other consumer and common to all business units were implemented protection agencies. throughout the organization. • Performance of duties of certain consumer protection Service Excellence Committees: as reported in the 2009 agencies, serving clients in arrears and/or excessively edition, as part of the governance process of client-focused debt, with good results in the amicable and consensual actions, committee meetings were organized twice a renegotiation of debts, thereby avoiding the registering or month with officers from the business and back office areas, lodging of complaints and filing of lawsuits. and monthly committee meetings were set up with the executives of the same areas, to identify improvements, • Reformulation and qualification of Procons Telephone Service for the immediate resolution of the issues of clients monitor the projects and search for effective solutions for internal processes that impact client satisfaction. that turn to these agencies for mediation, including for Itaucard Shops: the bank created the Itaucard shops renegotiatiation of their debts. – 31 physical points exclusively to provide in-person • Participation in major conferences, forums and seminars service to clients, distributed throughout Brazil in of the National Consumer Protection System, organized easily accessible ares. They are specialized shops by different sectors of society, always with the purpose of whose purpose is to act quickly to resolve credit card debating the proposed topics. issues of the Itaú Unibanco conglomerate and provide assistance consumers. The focus of the shops is to • Participation in working meetings with the National facilitate communication with consumers that turn Consumer Protection System across the country to discuss to Procon for immediate solutions to their problems important topics such as: Agreements, Fees, Fraud, New involving credit cards issued by Fininvest, Unicard, Products, Customer Service, Excessive Indebtedness and Itaucard, Taií and Hipercard, as well as the negotiation Conscious Use of Credit and Credit Cards, among others. of personal loan or credit card debts. 104 Relationships 94 Clients 104 Stockholders Suppliers Government 112 113 116 3 - More and better transparency in communicating products and services Transparency is essential in Itaú Unibanco’s relationships with In essence its clients. Accordingly, in 2010 one important agenda was Client satisfaction carried out, seeking to make communications with consumers clearer, especially in relation to items that are more difficult to understand. As part of this initiative, the bank restructured its communications materials – both internal and external – in order to improve the understanding of its messages and information: Agreements and summaries: we started to use simpler expressions to ease public understanding; Client satisfaction is our priority. Therefore, listening to them, through surveys, market research, forums and other communication channels is one of the premises of the organization, which has, as one of its main goals, building transparent and long-lasting relationships. Bank statements and bills: we replaced technical terms, in addition to simplifying and explaining the language used in these documents; These changes are not only timely, but also part of an ongoing effort to improve communications with clients. Sales and products: we reviewed processes and made 4 - Client satisfaction changes in the scripts. Satisfaction survey: Itaú Unibanco also conducts surveys Below are some examples of the materials reviewed: with a sample of active clients, aimed at evaluating client satisfaction with the main features of the bank relationship. • Retail banking This survey, which has been conducted every six months since New contracts; consultation on changes in LIS charges in the 2008, is based on a quantitative methodology with a random bank statement. sampling representing the client base, and is conducted by telephone, without identifying the bank. Based on the • Cards and Credit Shops outcomes of this survey, action plans are designed for the Review of the credit card bills; executive summary; tips for the purpose of maintaining and permanently improving the wise use of credit cards. results. Feedback is obtained from these surveys, call centers and Client Forums (periodic meetings with groups of clients • Itaucred/Real Estate Loans and bank executives). Creation of the Total Effective Cost of vehicle financing; improvement in communications and the process of For the purposes of measuring client satisfaction at the points reimbursing the Bank Collection Fee in Itaucred; new guide of sale, surveys are conducted in all branches. Based on the for Itaú Real Estate Loan clients. quantitative methodology, these are carried out via Bankline (Internet), ATMs (for the individuals segment) and telephone • Insurance/Garantec (for the corporate segment). The surveys for the individuals Garantec executive summary; explanatory folder on segment have been conducted monthly, and for the corporate capitalization. segment, weekly, since 2008. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations Environment 117 119 105 Relationships In 2010, surveys were conducted for the individuals In essence segment (Retail/Itaú Uniclass and Personnalité), the corporate segment, the credit card area and Itaucred, comprising the portfolio of available products and Financial education points of sale. (PR5) Client Forum: The Client Forum is an Itaú Unibanco initiative to ensure compliance with one basic assumption in the pursuit of service quality and business continuity: listening to the clients. Aimed at increasing the bank’s understanding of the opportunities for improvement throughout its management, the forum is also a way to promote direct contact between the company and those who use its services and contract its products. Itaú Unibanco has taken it upon itself the task of stimulating clients to use their money in a conscious way. To this end, we provide the Credit Guider (an online tool that identifies the ideal credit for each consumer) and we offer – to clients and non-clients – meetings to educate and create awareness, such as TEDx Vila Madá. The open dialogue environment created in these meetings is based on transparency and a willingness to listen, understand and meet the expectations of account and credit card holders and consumers of other financial products. Protection Code, Itaú Unibanco reinforced its commitment Itaú Unibanco holds specific Client Forums for each business to respect consumer rights and internal practices to meet segment. Each group is composed of eight to 12 randomly client satisfaction. On this occasion all the organization’s invited clients, who take part in four meetings with the officers accompanied the launch of a client relationship organization’s executives during the year. With membership guide and a new institutional recognition program called changed every 12 months, the group is selected on a random the Todos pelo Cliente Award. basis from the conglomerate’s client base. In 2010, 14 meetings with five different bank areas were held. The alignm the Itaú Unibanco teams, through the transmission of the lessons learned from experience There are real examples of client suggestions that have with consumer protection agencies in a number of the been incorporated by the bank. This is the case of the bank’s business areas, is noteworthy for its emphasis expansion of convenience processes, which today enables on continuously respecting clients. An example of the us to send account holders, via e-mail, information on constant involvement of the whole organization was the operations carried out electronically, such as TED and DOC. Consumer Protection Forums held by Itaú Unibanco in Another request arising from the forums, which is already the cities of João Pessoa and Campinas. For the first time, being tested, is the videochat, which offers online advice these events gathered managers from all business areas on financial investments on the exclusive website of Itaú of the conglomerate, headquartered in the region, who Personnalité. (Profile 4.16) (PR5) talked about respecting consumers. The forum was aimed at raising awareness and uniting the team around Todos 5 - Working with the internal stakeholders pelo Cliente, improving the relationships with the local In line with Itaú Unibanco’s new culture, over the year we consumer protection system bodies and enhancing the carried out a number of actions aimed at raising internal institution’s image in the state, in a joint effort to improve awareness of performance focused on service quality and client satisfaction and reduce complaints. Considering the client satisfaction. At an event with leaders held in September, success of this activity, new forums will be held in many the month of the 20 year anniversary of the Consumer regions in Brazil in 2011. th 106 Relationships 94 Clients 106 Stockholders Suppliers Government 112 113 116 Employees are informed of the main projects and client- 6 - Financial education focused actions focused are published in the Itaú Unibanco The Conscious Use of Credit and Credit Cards topics should be magazine, which is distributed to all employees. Therefore, prioritized in 2011 in order to prevent high indebtedness by families. the actions are communicated and good practices are It is necessary to improve the mechanisms for credit granting and shared among the areas. contracting, monitoring of borrowers and renegotiation of debts. After all, financial education is a project for society as a whole (families, schools, companies, universities) and, in particular, Itaú Unibanco and the consumer protection bodies. (FS16) Ombudsman’s Office – a commitment to the client Delivery of products and services with transparency and its efforts to identify and propose improvements, by clarity, ensuring client satisfaction, is one of the main starting to point out, in addition to measures to correct reasons for Itaú Unibanco to make every effort necessary and improve products and services, any opportunities in its ethical management. And the bank’s Ombudsman’s to improve the SACs. In addition to the specialized Office, set up in 2005 (two years before it was mandated by problem solving services, the Ombudsman’s Office is the Central Bank), plays an important role in this structure, responsible for handling any complaints registered by the reinforced by and based on the internal guidelines focused conglomerate’s clients with the Central Bank or Procons or on client satisfaction. aired in the media. It has been recognized for its progress – for example, the Consumer Protection and Defense The Ombudsman’s Office operates as a communications Department’s identification of Itaú Unibanco as the most channel of last resort for clients to file complaints, and efficient financial institution in the preliminary complaints it works on resolving the problems of clients who have resolution process, according to data from Sindec. already used the preliminary customer service channels – Consumer Service Center (SAC), call centers, branches and In 2010, in order to seek an even more efficient service Fale Conosco (Contact Us) – and have not been satisfied to meet client complaints registered with consumer with the response or whose request has not been fully defense bodies, the structure of the Ombudsman’s Office met. The Ombudsman’s Office is also responsible for expanded the Client Telephone Service to the Procons carrying out the process of assessing and identifying (0800), a means for Procon representatives to contact opportunities to improve products and service and the bank and find an immediate solution to problems referring these to the applicable areas. of clients who seek the mediation of the consumer protection bodies. The Ombudsman’s Office is one of the areas that take part in the governance process of assessing new products, Also in 2010 the Ombudsman’s Office of Itaú Unibanco by analyzing their impact on the client’s vision and their was the first Ombudsman’s Office of the financial sector adherence to the Consumer Protection Code. in Brazil to receive the international certification ISO 9001 (quality management). The certification is a In 2010, in line with the institutional purposes expressed recognition of the excellence of the body’s management in the Vision, the Ombudsman’s Office expanded its system, which, in order to receive it, has undergone a performance, enabling more clients to use it and, detailed diagnosis of its activities, as well as a review of therefore, sort out their problems directly with the documents and procedures and the definition of new bank. The Ombudsman’s Office has also intensified quality parameters. (Profile 4.16) (PR5) Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations Environment 117 119 107 Relationships Customizing client service Throughout its journey, Itaú Unibanco has understood that there are different client profiles, with specific demands for each moment in their lives – and that, in order to be a good partner, the bank would have to make large investments in the segmentation of its products, services and customer service. This strategy has enabled the company to establish closer relationships with its clients and reach satisfactory results in terms of lines of credit, investment advice and delivery of financial products and services tailored to each group of clients. In Brazil, there are a large number of clients whose relationships with the bank are still only beginning – a group composed of individuals who are opening their first bank account and have a basic level of knowledge of the financial services available. Itaú Unibanco is concerned about offering this segment the necessary information through the customer service process in the branches and contact mechanisms available on the Internet, at ATMs and by telephone. With transparency and using a user-friendly wording, we are concerned about meeting the needs of these clients in a timely, accurate and ethical way – and with starting a longterm financial education process so that the client may better plan the use of the loans that will be granted. Another segment is composed of clients to whom Itaú Unibanco’s challenge is to offer the same comfort in financial operations, in addition to providing flexibility and advantages when granting credit and offering investment advice. These are people concerned about planning the future and who need the bank to be a strong and reliable partner. There are also clients with occasional credit demands who are more concerned about how to make safe and profitable investments Itaú Unibanco strives to offer customized services to all client segments, quickly, accurately and ethically. value, for which the bank provides specific communication channels that are undergoing permanent improvement. It is important to emphasize that the strategy to segment customer service is not directly related to segregation by income, but rather to the different needs of each group in relation to banking services – a factor mainly linked to the different stages in the personal and financial lives of the clients. Without this strategy, it is not possible to provide clients with products and services that are truly suited to their expectations. 108 Relationships 94 Clients 108 Stockholders Suppliers Government 112 113 116 Initiatives to improve access to services Client security Itaú Unibanco is also concerned about providing the underprivileged population with access to banking For the purposes of client security at the bank’s CSBs services. Areas in which the population density is lower and branches, Itaú Unibanco assesses any impacts than the average and/or that have an economically on security at the following levels: products and vulnerable population were identified as the following, services (asset security at points of sale related to according to data from Fundação Seade (Seade security surveillance and equipment), development Foundation), Instituto Brasileiro de Geografia e Estatística of the offered product or service concept, operation, (Brazilian Institute of Geography and Statistics), Pesquisa use and service. As regards the stages of research and Nacional por Amostra de Domicílios (National Housing development, certification, marketing and promotion, Survey), and the Economia Informal Urbana (Informal as well as disposal, reuse or recycling, there is no impact Urban Economy) survey: (FS13) and this assessment is not applicable. São Paulo – Carapicuíba, Tremembé, Brasilândia, Brás, Pq. São Itaú Unibanco invests in this security impact assessment in Rafael, Pq. Marajoara, Cangaíba, Ermelino Matarazzo, Jardim compliance with Federal Law No. 7,102/83 (which regulates Helena, Itaim Paulista, São Miguel Paulista, Itaquera, Iguatemi, financial institutions and the inspection body, which is Cidade Tiradentes, Guaianazes, Lajeado, Campo Limpo, Capão the Federal Police) and with legal requirements (state and Redondo, Heliópolis, Paraisópolis, Socorro, Pedreira, Cidade municipal laws). Compliance is also ensured in its relations Dutra, Santa Catarina, Parelheiros, Grajaú, Diadema, Mauá, Cotia, with the bodies of the Public Security Department (Federal, Itapevi, Itapecerica da Serra, and Taboão da Serra. There are 32 Civil and Military Police) and its internal policies (as defined CSBs in these locations. in executive committees – such as the Asset Security Committee – or the Corporate Security Office (Diretoria de Rio de Janeiro – Rocinha, Vila Cruzeiro, Morro do Alemão, Vila Segurança Corporativa – DSC) itself ). do João, Maré, Mangueira, Manguinhos, Lixão, Vl. Operária, Vl. Ideal, Mangueirinha, Pantanal, Cidade de Deus, Boréu, Rio das The security policy includes the following procedures: Pedras, Juramento, Quitungo, Morro do Bumba, Vila do Vintém, layout analysis of points of sale (branches/ CSBs/ credit Morro dos Macacos, Jacaré, and Acari. There are 21 CSBs in shops) to be opened or under construction, renovations for these locations. installing security devices and risk analysis of points of sale aimed at improving security aspects. Rio Grande do Sul – Alvorada (Americana), Viamão (Santa Isabel), Canoas (Matias Velho), and Porto Alegre (Ruben Berta, The bank also determines and implements the security Lomba do Pinheiro). There are four CSBs in these locations. policy for employees and service providers in the points of sale. The resources employed include circulars/regulatory In order to discuss measures to support the victims of the bulletins, security manuals, DVDs, lectures and internal heavy rains that struck the Northeastern Region in June 2010, communications, among others. (PR1) Public Assistance Hearings were held in the cities of Recife and Palmares, State of Pernambuco, with members of the local consumer protection bodies, municipal authorities and representatives of economic sectors, among them the banking sector. Some initiatives by Itaú Unibanco related to credit granting and in solidarity with the affected population arose from these meetings. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations Environment 117 119 109 Relationships Visually impaired account holders have options to have conformity with these codes on an ongoing basis, by means their contracts read when they open their accounts, of market surveys, customer service channels and the joint in addition to their bank statements, letters with management of internal controls, compliance and legal instructions regarding debit cards – carried out by issues. Itaú Unibanco does not sell prohibited products the commercial team – and card cases. Regarding the or products objected to by stakeholders. (PR6) (Product bank statement and the instruction letter, the client Management Approach) may opt for how they want to receive them: in Braille and enlarged characters or normal format. The card Fines related to the provision case, meanwhile, comes with information described in of products and services Braille, expanded characters, normal format and high In 2010, there were 1,613 administrative sanctions imposed relief. Of a total of 2,483 visually impaired clients, 4% on the bank due to non-compliance with laws or regulations have opted for the enlarged character format, 8% for related to the provision and use of products and services. Braille, and 7% for the regular format. The others have Two of these sanctions were significant, with potential chosen no option. (FS14) penalties totaling R$2.9 million (together). Another relevant action is the adjustment of bank These two penalties, which are pending final decision, refer branches to the necessary building infrastructure to the alleged issue of unrequested cards, one of them (ramps, special toilets and tactile flooring), to involving Procon in the State of Minas Gerais, in the amount facilitate the access of disabled people. By the end of R$1.9 million, and the other Procon in the State of São of 2010, 87% of the branches and CSBs had been Paulo, in the amount of R$1 million. adapted. (FS14) There were other prospective fines, less significant in Communication and marketing amount, resulting from proceedings that are in progress. As a voluntary standard related to communication and There were no significant amounts paid as fines in marketing, Itaú Unibanco complies with the Corporate administrative proceedings. Code of Ethics, Nosso Jeito de Fazer, Corporate Guide for Information Security, Corporate Crises Management In 2010, there were 23 lawsuits involving the potential Program and Business Continuity Guide. The bank application of significant fines, in the total amount of R$19 adheres to the Self-Regulation Codes of BACEN, Susep, million, which are awaiting ruling. the Conselho Nacional de Autorregulamentação Publicitária (National Council of Advertising Self-Regulation), The monetary value of the significant fines, for the period, Febraban, the Associação Brasileira das Empresas de totals R$22 million. (PR9) Cartões de Crédito e Serviços (Brazilian Association of Credit Card and Service Companies) and the Código de Defesa do Consumidor (Consumer Protection Code), among others, which also regulate the communication and marketing of financial services. We analyze our The Conscious Use of Credit and Credit Card should be prioritized by Itaú Unibanco in 2011 in order to prevent high indebtedness by families. 110 Relationships 94 Clients 110 Stockholders Suppliers Government 112 113 116 As a voluntary standard, Itaú Unibanco complies with the Corporate Code of Ethics, Nosso Jeito de Fazer, Corporate Guide for Information Security, Corporate Crises Management and Business Continuity Guide. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations Environment 117 119 111 Relationships Stockholders Creation of value and information In a selective and dynamic market such as the The bank also publishes the Ações em Foco (Actions financial market, transparency, timeliness and the in Focus) newsletter. With a print run of 80,000 issues, quality of the information provided to stockholders, which are sent to stockholders with updated reference analysts and investors are a strategic differentiator files as well as to employees of Itaú Unibanco, this for Itaú Unibanco. newsletter presents the results and the performance of shares in the quarter, in addition to the organization’s main social and environmental actions. Among the most important tools to improve the relationships with these strategic stakeholders of the bank are the public gatherings and meetings The communication system of the bank with held during the course of the year, focused on the capital markets also includes this annual results and the bank’s strategy. In 2010, Itaú sustainability report, the quarterly information Unibanco organized 22 Apimec meetings in Brazil report, a Twitter account (@itauunibanco_ri), and 19 conferences and road shows abroad in cities teleconferences on the bank’s results and strategies, like London, Edinburgh, New York and Miami. (FS5) e-mails, telephone service and the publication of communications and relevant facts. (Profile 4.4) Another important action last year was the participation in 11 Expomoneys – a round of The investor relations area has also been participating events aimed at the financial education and in the bank’s commissions and committees since 2005. training of individual investors – in which Itaú The core purpose of this involvement is to determine the Unibanco became closer to investors and social and environmental responsibility of Itaú Unibanco professionals in the industry by disclosing and establish the alignment of the bank’s actions by information on the company and giving analyzing risks, opportunities and threats concerning its lectures on financial education. The Internet is social and environmental actions, in addition to proposing an important means of communication with projects and solutions. (FS5 e FS10) investors. The bank has its own channel: the website www.itau-unibanco.com.br/ri, in three languages (Portuguese, English and Spanish). In order to facilitate the relationship with stockholders, we publish the newsletter Ações em Foco (Shares in Focus), which presents, in detail, the results and the performance of the bank’s shares. In 2010, a study conducted by an external consulting firm of the websites of the ten largest banks in Brazil found the Investor Relations website of Itaú Unibanco to be the only one to present a level of excellence in communication with its many stakeholders. 112 Relationships Clients 94 100 Stockholders Suppliers 112 113 Government 116 Suppliers Sustainable partnerships In 2010, Itaú Unibanco’s strategic plan of relationships bank. The purpose of this is to minimize the main risks with its main suppliers was improved. With a base of associated with the relationships of Itaú Unibanco with 103,000 companies that deal with the bank – whether companies that are either unsuitable or suspected of supplying simple quotes or products and services that involvement in unlawful acts. The challenge for 2011 is to are indispensable for the operation of the many areas of expand this analysis to other risk categories. the organization – the bank must have an operational model that allows and ensures the dissemination of Itaú Unibanco also offers a specific communication channel good management practices, respect for human rights, for its suppliers on the Internet, which was developed in compliance with labor legislation and preservation of the accordance with the guidelines of the AA1000 international environment. (HR2) standard, which establishes transparency and accountability standards. The site has been constantly evolving to allow This process is conducted by means of an area that greater clarity with respect to the bank’s expectations and the centralizes procurement and supplier management, obligations included in contractual clauses. whose main objective is to ensure that the processes for the acquisition of products and services that are Another action taken in 2010 was the broad disclosure of the necessary for the bank are conducted efficiently and Itaú Unibanco Code of Ethics, which should also be known and ethically and that they are free from legal or operational followed by suppliers. In this way, the values and principles risks that may jeopardize the performance of the that guide the bank’s actions can be extended to the whole business areas and client satisfaction. The application production chain, ensuring better provision of services to end of the Procurement Policy facilitates a careful selection clients. (Product Management Approach) of suppliers and the subsequent monitoring of the Contracting local suppliers application of the required practices. (HR2) The regionalization of contracts takes place in cases in which In 2010, in continuation of the operational model established this practice adds efficiency to the operation. The selection in 2009, all main suppliers underwent a ratification process. of suppliers takes different factors into consideration, The evaluations were made in accordance with a category risk such as financial health, environmental and social matrix, which determines the management model and the management, technical qualifications, costs and efficiency criteria that should be applied in its ratification process. For in the performance of their activities, among others. All the categories that pose greater risks, which are represented competitors are treated equally. by approximately 2,000 companies, the monitoring is more frequent, allowing each supplier to have a risk score in In 2010, expenditures to suppliers represented 72% of total accordance with its operation. expenditures. In some regions, the percentage increased and the process of migrating branches was a factor with a Additionally, in 2010, suppliers started to be evaluated major influence. (EC6) based on their prevention of unlawful acts and frauds. This was part of the Conheça seu Fornecedor procedure, which establishes conditions for the registration of companies to be made with all the analyses necessary to ensure, accurately and at any time, that we know the identity (“who”), the activity (“what it does”) and the suitability of the people who maintain commercial relations with the Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations Environment 117 119 In 2010, expenditures with local suppliers represented 72% of total expenditures with suppliers. 113 Relationships When allegations or cases of non-compliance are identified among the active suppliers, should any violation be verified, Expenditures with local suppliers, by region (in %) an action plan is immediately created that may result in the termination of the agreement for the entire supplier $ North organization. 2009: 65% In relationships with its suppliers Itaú Unibanco adopts 91% preventive procedures and actions aimed at mitigating possible risks, therefore minimizing the number of occurrences. $ Northeast 94% For example: 2009: 60% 1. In the approval process, suppliers are evaluated based on a matrix that determines the level of risk in each Midwest $ 77% 2009: 70% category, management model and evaluation criteria. $ Southeast 72% 2009: 77% These analyses consider not only the financial and tax aspects, but also the social and environmental aspects and the operations that are in conflict with the corporate ethics and values, among other things. This process is periodically reviewed; South 91% 2009: 76% $ 2. For the high risk categories, during the period in which the contract is active, suppliers are more frequently monitored, allowing the areas that manage the operation to have a global view of their contracted Calculation method: we consider operating units that are important to the operations by Brazilian state. Local suppliers are those in the same areas as those generating the demand. suppliers and to be able to act preventively in the event of non-compliance; 3. All service agreements between Itaú Unibanco Policies and practices related to human rights and its suppliers specify compliance with labor In 2010, no cases of violations of human rights, (domestic and foreign), social security and child or young workers exposed to hazardous work, tax obligations. They also refer to social and forced labor or the equivalent of slave labor were environmental responsibility that is compatible identified in supplier operations. Itaú Unibanco with the principles and responsibilities stipulated in offers communication channels via telephone, its legislation – and, in particular, with the rules related website and e-mail, by means of which any person to the preservation of the environment and respect can register complaints, suggestions and questions. for constitutional social rights; These communication services are prioritized by the bank, and if any indications that a supplier is violating 4. The corporate procurement policy and the ISO 9001 human rights laws are identified or if any information procedure are available on the corporate portal and on such practices is received, an internal investigation is are regularly updated with the improvements made opened. (HR6 e HR7) to the process. (HR2) 114 Relationships Clients Stockholders 94 100 112 Suppliers 114 Government 116 Itaú Unibanco has communication channels via telephone, website and e-mail. Anyone can use these channels to file complaints, offer suggestions and ask questions. Itaú Unibanco, by means of a suppliers’ website, has evaluating companies regarding the prevention of money transparent relationships with all of its potential suppliers. laundering and unlawful acts – the latter will be implemented The approval process clearly requires care for the social in 2011. (Society Management Approach) welfare of employees, such as the non-existence of child and forced labor, health and security at the workplace, Security practices freedom of association and affiliation with unions in different The security teams are composed of outsourced service providers employment categories, diversity, proper working hours who, according to legal requirements, take a training course and, and compensation, more humane disciplinary practices and every two years, take a refresher course. These courses include maintenance of an effective communication channel for topics such as human rights and human relations in order to outsourced employees to be heard within the structure of prepare them for dealing with the public. the contracted companies. Itaú Unibanco developed a guidebook and a thematic video In 2010, Itaú Unibanco was once again awarded with a called De olho na segurança e no bom atendimento (An eye on certification in the supplier evaluation process by ISO 9001. security and good service), which guide these professionals in their Among the improvements implemented in the evaluation compliance with the security policy. The materials are distributed processes and systems are the improvement in the to security service providers for use in the training of the security registration tool, inclusion of more detailed information, guards. They address issues such as education, courtesy, respect, which allows for more in-depth analyses, implementation discrimination and dealing with disabled people. (HR8) (Human of the electronic contract and the design of a system for Rights Management Approach) Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations Environment 117 119 115 Relationships Government to political parties or committees. The amounts allocated for this purpose also strictly follow the laws governing Transparency in elections donations to political campaigns. Itaú Unibanco supports political candidates according to the principles and values of transparency and ethical The Political Assessment Committee is responsible for conduct, which are the basis of the organization’s examining the candidates’ histories and political platforms operation. In 2010, donations made by the bank to and for selecting the candidates whose campaign messages candidates from all regions of Brazil amounted to place the most importance on market competition, R$23.7 million. meritocracy and social development. To ensure the ethical conduct of this procedure, a Political For more information on the subject and about the Contributions Committee comprising board members and donations made by Itaú Unibanco, visit www.tse.gov.br/ executives of the bank was created. Our policy determines internet/eleicoes/2010/prestacaoDeContas.html. (SO6) that contributions go entirely to the candidates and not (Society Management Approach) Allocation of Itaú Unibanco donations to candidates in the 2010 elections (SO6) Per sphere* Per coalition 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 National Congress O Brasil Pode Mais (1) States (1) PSDB/DEM/PTB/PPS/PMN/PTdoB Para o Brasil Seguir Mudando (2) (2) No coalition PT/PMDB/PCdoB, PDT, PRB, PTC e PTN * National: President; Congress: federal representatives and senators; State: governors and state representatives Per position Per region 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 President Governor Senator 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Federal State representative representative North Northeast South Southeast 116 Relationships Clients Stockholders Suppliers 94 100 112 113 Government 116 Midwest Media and public relations held in eight Brazilian cities to publicize the Olimpíada da Língua Portuguesa – a governmental program based on the Ongoing management of reputational risks and opportunities for involving the specialist press was the International In 2010, for the seventh consecutive year, the Itaú brand was Seminar on Economic Evaluation of Social Projects, which considered the most valuable brand in Brazil, according to the brought together experts to debate the topic in São Paulo. global consulting firm Interbrand, a pioneer in the development The year 2010 also marked the expansion of Fundação of the brand valuation method. The bank’s brand was valued Itaú Social’s frontiers in dealing with journalists from at R$20.6 billion, almost double the amount of R$10.552 billion international publications. methodology of Fundação Itaú Social. Another opportunity measured in 2008, the date of the last ranking. This is the result of a number of actions focused on delivering better products and The close and long-term relationships with its stakeholders services, in addition to efforts to gain market and clients’ trust, contribute to the good reputation of the bank. In addition to the as well as investments in marketing and advertising campaigns. relationships with the media, contact with other stakeholders is But branding is part of the ongoing process of managing the fundamental, and one of the ways we do this is through public reputation the bank has built over its history. relations initiatives. Therefore, institutional events, holidays, anniversaries and sponsorships are a few of the opportunities In this context, Itaú and Unibanco see the media and opinion we have to be in contact with these people. makers as stakeholders in the process of establishing a transparent and ethical dialogue with society. Through a Examples of this tendency are the guided tours to introduce the specialized team and a specific area on the bank’s website new concept of service and the new layout of our branches to (www.itau.com.br/imprensa), news organizations can access all clients (Retail and Uniclass), stockholders, opinion makers, media communications and press releases, organized by month, ask and government. The visits were conducted at the Iguatemi for assistance in making news reports and ask questions about branch (in São Paulo, with 40 participants) and in Santos (State specific business areas, management, financial performance of São Paulo, with 60 participants). and social investment programs developed by the organization. In 2010, 134 press releases were issued and over 1,000 requests Another situation in which we focused on contact with different from journalists were answered. stakeholders was the Brasiliana Itaú exhibit, which opened in São Paulo and was also presented in Belo Horizonte and Rio de In 2010, Itaú Unibanco occupied a leadership position among Janeiro. Other centers in Brazil will be hosting the exhibition in private banks in terms of positive exposure in the media. An 2011. The objective of this event was to present to stakeholders external audit conducted by the agency CDN showed that the one of the most extensive and significant collections of bank was mentioned positively more than 148,000 times and historical and visual Brazilian memory and strengthen the negatively nearly 21,000 times over the year. relationships with opinion makers of great importance to Itaú Unibanco. During the exhibition, we offered a guided tour During the year, we took actions that contributed to the led by the curator Pedro Correa do Lago. Among the many accumulation of knowledge, strengthening the concept stakeholders who were impacted by this initiative were opinion of financial education. An example of this is the series makers, media, clients of CSBs, government representatives and Macroeconomia em Pauta (Macroeconomics on the Uniclass and Personnalité clients. Agenda), which brought together journalists and the bank’s macroeconomic team in four events, and the workshop The Christmas event held at Mario Covas Park, located on “The evolution of the consumption of class C”. The area Avenida Paulista in São Paulo, was another opportunity to also maintains a close relationship with the media that strengthen our relationships with opinion makers and their specializes in education, because of Fundação Itaú Social children, the media, clients and Fundação Itaú Social partner and Instituto Unibanco. In 2010, two road shows were organizations. The main purpose of this action was to attract Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations 117 Environment 119 117 Relationships stakeholders to the shows and to see the decoration of the park. Mario Covas Park is maintained by a partnership between the bank and the municipality of São Paulo. Itaú Sustainable Finance Award Companies that focus on organizing and putting into practice the management of sustainability also have a duty to encourage the popularization of this subject outside their domain, fostering dialogue and reflection in society in general. In line with this concept, Itaú Unibanco developed the Itaú Sustainable Finance Award, whose second edition was completed in 2010 and acknowledged the work submitted by journalists and academics on the subject. Developed in partnership with the Ethos Institute and the British consultancy SustainAbility, the prize is awarded every two years. After wide consultation with various stakeholders, it was determined that the award program would work with the concept that “sustainable finance actions are all the initiatives that are linked to the core activity of institutions in the financial market that are aimed at integrating economic, social and environmental aspects. “ The goal is to create a network to disseminate the concept and promote the debate on sustainable finance. The award is given in even-numbered years – like 2010 – and is intended to encourage the participation of journalists and academics. In odd-numbered years we promote discussions, workshops and the publication of content on the website www.itaufinancassustentaveis.com.br or through classroom activities, aimed at spreading all of the information and ideas that exist on the subject. We created the Itaú de Finanças Sustentáveis (Itaú Sustainable Finance) Program to encourage dialogue and reflection on the topic in society. Professionals and students who submitted their work were awarded in the following categories: Journalistic Work – Newspapers, Magazines and Digital Media (Internet) – and Academic Work – Undergraduate, Lato Sensu post-graduation program and Stricto Sensu post-graduation program. The winners of each category received a prize of R$10,000. The editors of the winners of all journalistic work categories and the supervisors of the winners of all academic work categories received an Itautec Netbook. The media companies and educational institutions with which the winners are associated received an award certificate. (Sector Management Approach) 118 Relationships Clients Stockholders Suppliers Government 94 100 112 113 116 Environment Efficient natural resources management Itaú Unibanco operations have direct and indirect impacts on In essence Climate change the environment. Therefore, one of the strategic concerns for the bank management is the quest for tools that will enable it to make rational and appropriate use of resources. Actions geared towards enhancing the energy effectiveness of the electronic DPCs and computers, recycling waste and disposing of it properly, reusing water and reducing the consumption of paper and other inputs are some of the concerns of all areas. Such actions can yield effective operational gains. We are aware that, since we have a large client and employee footprint, innovations and small improvements yield significant results. In 2010, the renovation process for the integration of branches In order to mitigate the impact of our operations on climate change, Itaú Unibanco implemented, in 2010,... ...renovations in the administrative buildings for the introduction of more economical and efficient equipment. Also, another five telepresence rooms were equipped, totaling nine rooms throughout the conglomerate. posed a challenge for the environmental management. Added to the data centers, workstations and inventory renovation, this process generated about 3,800 metric tons of electronic While these initiatives were in progress, Itaú Unibanco launched a waste, which was collected and properly disposed of – with the number of awareness campaigns aimed at its workforce, in order support of specialized contractors hired by the bank – in order to promote the sustainable disposal of technological devices. to prevent environmental damage. This type of waste poses The results achieved were quite rewarding, with over 3,200 items significant soil and groundwater contamination potential, due collected, including mobile phones, chargers, videogames, to the heavy metals employed in its manufacture. computers, printers, keyboards, mouses and other components, amounting to about 3 metric tons. After this technological waste Focusing on the generation of electronic waste, the Sustainable is processed, salts and metallic oxides are obtained. These will be Guarantee program, launched in December 2009, promotes used in chemical, paint, ceramic dyeing materials, and ceramic and the collection and proper disposal of electronic waste - and refractory plants, among other industries. was responsible for the collection of about 2.2 metric tons of materials throughout 2010. Collection points were placed at Thus, in 2010, Itaú Unibanco generated 10,492.77 metric franchised customer service outlets within the Greater São Paulo tons of waste in its operations, out of which 239.57 metric area, as well as in other cities throughout the state. In addition to tons comprised hazardous waste – in addition to 15 CRT the disposal of batteries and broken or unused electronic devices, units. The weight of the hazardous waste taken to outside the corporation encouraged the customer service outlets to send suppliers/locations amounted to 236.81 metric ton. (EN24) on the replaced components after the repairs were made, such (Environmental Management Approach) as CRTs, monitors, metal wires, plastic components, printed circuit boards and cables, and electric motors. All waste was forwarded to specialized contractors – which are our partners in this project – for materials treatment and recycling. Currently the program is in place in 18 cities within the State of São Paulo. We plan to Amount of waste generated by the corporation’s operations in 2010 (EN22) extend the program to other regions in Brazil throughout 2011, taking into consideration the general public’s awareness of the need to minimize the environmental impact caused by electronic hardware waste. (EN27) Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations Environment 118 119 Hazardous (local legislation or place of origin) Non-hazardous (all other solid or liquid waste, except effluents) 239.57 M.T. 15 CRT units 13,902.50 M.T. 119 Relationships Materials employed Itaú Unibanco uses, in all of its operations, only paper certified Total amount of waste by type and means of disposal (EN22) by the Forest Stewardship Council (FSC). This is an assurance that the whole production process has been verified and that Hazardous waste Description CRTs Amount 2010 Means of disposal 2010 Amount 2009 it uses inputs in compliance with environmental and social Recycling criteria, according to sustainability requirements and in line with the applicable labor and tax legislation. Throughout the 15 units Reuse Sundry batteries (uninterruptible power supplies, among others)1 221.6 M.T. Recycling 118.0 M.T. Yes Fluorescent light bulbs2 12.00 M.T. Recycling 7.7 M.T. Yes and credit cards were produced and issued. The cards were not Sundry batteries9 2.21 M.T. Recycling 4.6 M.T. Yes manufactured from recycled material. (EN1 and EN2) Sundry batteries 0.55 M.T. Sanitary landfill/ Industrial landfill/ Export Sundry batteries 2.40 M.T. Industrial landfill 0.83 M.T. Electro deactivation through microwave treatment 3 Outpatient clinic waste 4 Organic waste 5 Coolant gas6 was FSC-certified. Within the same period, 41,817,228 debit Water With regard to the use of water, Itaú Unibanco does not affect water sources in a significant manner, since its administrative buildings only use water in order to meet the employees’ basic requirements, as well as for cooling and cleaning. (EN9) Non-hazardous waste Description year 2010, we consumed 48,428 metric tons of paper, and 100% Amount 2010 Means of disposal 2010 Amount 2009 Recycling 216.20 M.T. Composting 223.7 M.T. Yes 3.3 M.T. Recycling In 2010, the total volume of water provided by the utilities amounted to 710,381 m3/year in the administrative buildings and 1,281,160 m3/ approx. 1.6 M.T. year in the branches. Groundwater taken amounted to 89.803,45 Electronic waste8; 1 3,724.00 M.T. m3/year, originating from the three artesian wells from the Raposo Paper/cardboard approx. 3,650.00 M.T. 3,000.0 M.T. Yes Administrative Center, which have an initial water use registration Plastics 138.90 M.T. 157.0 M.T. Yes approved by the São Paulo State Basic Sanitation Company (Sabesp) Glass9 8.56 M.T. 5.9 t Yes (the licensing process is in progress), and from the artesian well at Aluminum9 16.89 M.T. 621.8 M.T. Yes Iron9 288.45 M.T. 366.5 M.T. Yes the ITM Administrative Center, which has been licensed by the local Sundry scraps7 9 9 approx. 80.00 M.T. Incineration (or use as fuel) Electronic waste 76.00 M.T. Industrial landfill Organic waste9 2,045 M.T. Sanitary landfill 500, 000 units Reusable products auction Elevated floors (wood) Refrigerator, stove, hair straightener, hair dryer, microwave oven, car radio, DVD player, etc.10 government and by Sabesp. No surface water has been taken (from rivers, lakes or oceans). Altogether, water consumption amounted to 2,081,344.00 m3/year (reused water excepted). (EN8) 1,348.5 M.T. No The total volume of reused water consumed was 40,929 m3/year, broken down as follows: 1 – Disposal of batteries and some electronic waste: the contractor turns printed circuit boards into salts and metal oxides, and the remainder, which can be recycled, is sent to manufacturing plants within several sectors, as raw material. 2 – Estimated amounts sent for decontamination; the items are collected by contractors (waste management companies), which, in turn, forward them to specialized decontamination companies (Apliquim or Tramppo Lâmpadas). Light bulbs go through a process whereby mercury is removed. 3 - Sanitary landfill/ Industrial landfill/Export. Disposal in accordance with Certificates of Allocation of Industrial Waste submitted by the companies. 4 – Stored by the outpatient clinic crews in proper packaging and collected by a contractor hired by Limpurb (the city’s garbage collection agency). The waste is taken to the contractor Unidade de Tratamento de Resíduos (Waste Treatment Unit), which is responsible for groups A and E (contaminated and puncturing/cutting objects). Once there, it goes through electric deactivation by means of microwave treatment and is decontaminated before undergoing a process whereby it is no longer classified as outpatient clinic waste. After this process, the waste in question becomes regular waste and is sent to a sanitary landfill accredited by the São Paulo Environmental Sanitation Technology Company (Companhia de Tecnologia de Saneamento Ambiental) in Caieiras (State of São Paulo). The amounts reported are estimated. The outpatient clinics are managed by a contractor. 5 – Actual amounts, checked and weighed (these are not estimated amounts). 6 – Coolant gas recycling is an item that was added to the bank’s contract about two years ago, and the results are just now becoming apparent. 7 – Estimated amount. 8 – The amount of electronic waste has increased considerably from 2009 to 2010 for two reasons: the disposal process of central management as a whole, of the branch networks and of inventories increased; and there have been transfers of branches (from Unibanco to Itaú). 9 – Estimated weight. 10 – Estimated amount and equipment. * The method of disposal was established according to information provided by the contractor in charge of waste disposal and also by means of organizational defaults of the contractor in charge of waste disposal. • Eudoro Vilela Tower (Corporate Center): collected from lavatories, originating from the city’s water supply; • Raposo Administrative Center: the water used within the building is rerouted for treatment upstream of the Parshall flume (a location where the volume of sewage sent to the city’s grid is measured). After treatment, this water is used for flushing and irrigation. The percentage of the total volume of water that is recycled/ reused by the corporation in relation to the total volume of water reported as taken is 2%. (EN10) 120 Relationships Clients Stockholders Suppliers Government 94 100 112 113 116 All the water used is disposed of in domestic sewers In addition, we neutralized theGHG emissions treated by the utilites (losses due to air conditioning associated with our 22 Apimec meetings, a evaporation or garden watering were not taken into project launched in conjunction with the Oscip consideration). (EN21) Iniciativa Verde (Green Initiative). (Environmental Management Approach) Direct energy consumption by primary source Total amount of water taken by source, in m3 (EN8) (EN10) As primary, non-renewable energy sources acquired by Itaú in 2010, we had: jet fuel, gasoline, diesel, natural gas (NG) and 2010 Branches 710,381 1,281,160 Public system Public system Water consumption (m³)/year Sources liquefied petroleum gas (LPG). We did not use any renewable Administrative buildings In 2010, the total amount of groundwater taken was 89,803.45 m3/year. In 2010, the total amount of groundwater taken from all sources was 2,081,344.00 m3/year (except for reused water). primary energy source. While accounting for our inventory, it was not possible to gather specific information about the fuel used to power some flex-fuel vehicles. In these cases, according to the GHG Protocol guidelines, we worked with the worst-case scenario, that is, we made our assumptions with regard to emissions based on the use of gasoline as fuel. In 2010, the total amount of reused water was 40,929 m3/year. The initiatives implemented to enhance the energy efficiency of equipment, computers, servers and other devices have had a Electric energy and emissions major impact on Itaú Unibanco’s environmental management. In A significant achievement was the construction of five 2010, following the virtualization of our servers, the replacement additional teleconference rooms – bringing the total number of tube-type monitors with new, LCD-type ones, and the physical of such rooms to nine which enable us to settle issues more modernization of the data centers, among other actions, we were quickly, in addition to reducing GHG emissions. Equipped with to avoid electric energy consumption on the order of 19,511 GJ. audio and video equipment, these rooms also increase the This reduction has resulted in savings of R$1,732,000. In 2010, possibility of interaction with other areas, both domestically 61,980.7 GJ was consumed. (EN3 and EN18) and elsewhere. The target for 2010 included the construction of one additional room, and the benefits achieved due to the initiative surpassed our forecasts. Energy saved due to improvements in conservation and efficiency Among the initiatives carried out in 2010 to reduce electric energy In the course of the 653 meetings (983 hours) held in these consumption is the use of T8-type fluorescent light bulbs (T5 light venues throughout the year, Itaú Unibanco prevented its bulbs are being evaluated) and electronic reactors in the new workforce from traveling 32,995 km over land (thus achieving branches, with a 15% reduction in electric energy consumption as savings related to the cost of taxis and other vehicles) and compared with conventional fluorescent light bulbs. 983,892 air miles (along with flight tickets and accommodation) – such trips would have caused the emission of 236 metric tons The pilot project for remote monitoring of electric energy of CO2. That is tantamount to the felling of 1,548 trees. (EN7) consumption in the bank’s branches, launched in five units, makes it possible to control the shutdown of air conditioning and lighting The possibility of expansion and interaction with other locations equipment; in addition water consumption can be monitored in and corporations is now being evaluated by the bank. The order to detect leaks. The system is connected to the utility’s meter, construction of new rooms is envisioned especially in foreign so as to allow the disconnection of a few pieces of equipment centers. In 2011, the nine Itaú Unibanco teleconference rooms (such as air conditioners) at peak demand times, when the cost shall be integrated with those of Itaú BBA, bringing up the total of electric energy is higher. One of the pilot branches analyzed number of such venues to 18. (EN7) (Branch # 0677 – Bom Pastor) achieved an average savings of 504 Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations 117 Environment 121 121 Relationships kWh at peak times and 341 kWh at off-peak times. That translates to average savings of about 10% in the branch’s average monthly electric energy consumption. This reduction in consumption Indirect electric energy consumption from primary source (EN4) corresponds, respectively, to 504,000 J/s and 341,000 J/s. Total 2009 MWh per employee 2009 Total 2010 MWh per employee 2010* 580,881,146.8 kWh 5.72 MWh 597,782,823.6 kWh 5.84 MWh With a view to reducing electric energy consumption, Itaú Unibanco uses more efficient equipment, materials and structures in the renovation projects of the administrative * Basis for calculation: 102,316 employees. buildings. A few examples of this are the replacement of traditional venetian blinds, the placement of heat-insulating film on the window glass panes, and the use of more efficient light fixtures. We have no way of measuring the savings achieved Itaú Unibanco draws electric energy from the nationwide with the implementation of these changes, since a number of distribution grid, and since in Brazil, the electric energy generation variables may play a role during this transition period, such as system is based on hydroelectric plants, it can be considered that, the mobilization of the workforce due to the restructuring of by and large, the electric energy is drawn from renewable sources. departments and the retrofit, the possible increase in electric Nevertheless, we must highlight the fact that the Brazilian electric energy consumption due to the times when lights on some energy system is deteriorating due to the growth of electric floors remain on (during nights and weekends) for renovation energy generated by thermoelectric plants. work, and the use of construction equipment, which use more electric energy, among other reasons. (EN5 and EN18) Emissions inventory The GHG inventory process, based on the GHG Protocol, is Initiatives to promote environmentally-efficient services evolutionary in nature. In 2009, we put together our first In this category, we would like to highlight the Foreign Currency our emissions. In 2010, based on the experience acquired in Current Account (Conta-corrente em Moeda Estrangeira – CCME the previous year, the process was improved. We were able to Online). This is a tool of Itaú 30 Horas which enables clients to transfer achieve improvements in data gathering. We also reworked the amounts from their real-denominated account to a foreign currency calculations in order to reducee uncertainties. In addition, we account (or vice-versa), request transfers between foreign currency separated the sources for better control. inventory, and the main outcome was that we were able to view accounts or send amounts to a destination abroad. The travel agencies that use CCME Online have begun to ask their vendors to The amount of emissions in scope 1 (direct GHG emissions) was e-mail their invoices, thus saving printing costs and electric energy reduced slightly, even though new emission sources have been consumption. The work to put together and print transaction letters, added. The reduction in emissions from our fleet of vehicles as the practice of sending couriers to the exchange facility and the well as the more focused management of coolant fluids – in the circulation of paper documents are no longer required. administrative buildings in which Itaú Unibanco has control over the purchase of such products – made it possible to offset the NG For 2011, the bank’s target is to see to it that the number of increase (since we took into account the cafeteria of an additional virtual servers surpasses the number of physical servers – as administrative building). of now, the ratio is 58% physical to 42% virtual servers – and complete the replacement of all tube-type computer monitors In scope 2 (GHG emissions from purchased electricity), we with LCD-type monitors, which will yield even larger energy doubled our emissions, even though our electric energy drawn efficiency gains. In addition, data center improvement projects from the grid has increased only slightly. This occurred because are forecast. The data centers, which will use more efficient the nationwide electric energy grid emission factor, a variable technologies and the best practices available in the market, will over which the bank has no control, increased from 0.0245 tCO2 / also make it possible to use less energy and space. (EN6) MWh in 2009 to 0.0511 tCO2/MWh in 2010. 122 Relationships Clients Stockholders Suppliers Government 94 100 112 113 116 In scope 3 (all other indirect GHG emissions), we exceeded the GHG Protocol’s requirements. We included the emissions originating from our paper waste in landfills and from composted organic compounds. The changes in the estimation method used to calculate fuel consumption have generated a considerable impact on the way we account for emissions, especially on the significant reduction in some of our emissions, such as in the transportation of valuables and cash in bags. (This was formerly based on the amount envisaged in a contract, and in 2010 it was calculated as a function of the number of unloading operations performed.) On the other hand, these reductions were offset by the increase of taxi use, for mileage allowance and fuel reimbursements and due to the transportation of cargo and materials, as a result of the transfer of branches from Unibanco to Itaú. (EN16, EN17 and EN18) 2009 2010 Emissions (tCO2e) Emissions (tCO2e) Total inventory 90,521.7 103,412.3 Scope 1 4,922.9 3,648.9 866.8 785.8 959.6 94.5 GHG source Our own aircraft fleet - fixed-wing Leased aircraft fleet - rotary-wing Mobile combustion Our own or leased fleet of vehicles 38.4 Car rental 134.0 Van (shipping) – IBBA Coolant (134a) Fugitive emissions 0.3 606.8 211.9 63.2 45.7 Fire extinguisher LPG Stationary combustion engines GN Electric and thermoelectric generators Scope 2 Electric energy acquired Electric energy acquired Scope 3 Commuter buses for employees + van service Car rental Mobile combustion outsourced fleet 168.2 479.2 2,258.3 1,859.1 14,233.3 30,546.7 14,233.3 30,546.7 71,365.5 69,216.7 2,736.2 1,030.4 83.7 Garantec 1,286.2 227.6 Transportation of cargo + materials 9,147.9 12,826.1 Cash and valuables transportation 18,566.2 4,382.6 Cash bag transportation + couriers 9,324.8 158.8 855.2 2,164.1 Airline tickets purchased 13,111.4 20,319.7 Fuel vouchers 12,817.8 18,991.2 Taxi Mileage allowance reimbursement Fuel reimbursement Waste 0.1 830.1 2,606.1 6,7624 Waste transportation 121.5 Landfill 445.1 Composting 85.6 Stationary combustion engines Electric and thermoelectric generators 924.3 Fugitive emissions Coolant (134a) 777.4 Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations 117 Environment 123 123 Relationships Emission of substances detrimental to the ozone layer (EN19) Gas type Consumption (t) Estimated emissions (t of CFC-11 equivalent) 2009 2010 2009 2010 R-22 2.65 1.7 0.146 0.1 R-141-b 0.27 0.2 0.002 0.02 Nitrogen oxides (NOx), sulfur oxides (SOx) and other emissions to atmosphere, in 2010* (EN20) Pollutants (kg/year) Source Activity Fuel Electric energy generation Stationary Mobile NOx SOx Total Organic Compounds Particulate Matter Carbon Monoxide Diesel 49,024.3 3,223.8 4,780.1 3,446.1 10,560.8 311.7 NG 1,038.9 2.2 40.8 28.2 LPG 44.1 0.0 3.4 2.4 Gasoline 19.6 194.1 34.9 19,906.9 50,126.9 3,420.1 4,859.3 Food preparation Transportation - light vehicles Total 25.5 293.4 3,476.7 11,191.3 * In order to calculate the emissions as required in this table, we chose to use only scope 1 of our inventory, due to the uncertainties associated with the other scopes, since it was no longer possible to calculate fuel consumption directly. This increases the uncertainty in this information – which is quite normal when dealing with GHG inventories. Since this indicator’s emissions are heavily dependent on factors such as technical specifications of the equipment, detailed breakdown of the fuel and type of combustion, the uncertainty in this calculation would have been considerable to begin with, and, once added to the uncertainty about obtaining the fuel volume, our result could be far from reality. Mitigation of environmental impact Itaú Unibanco has a number of initiatives in place to mitigate • implementation of a single after-sales kit (consolidation of the environmental impact of its products and services. We the after-sales kits) for individual life and personal accidents would like to highlight the following initiatives: insurance products, in keeping with the client segment (Retail, Itaú Uniclass or Personnalité). As a result, the cost of after-sales • implementation of the electronic insurance policy, with materials sent to the client saw a R$960,000 reduction; the following goals: to reduce the use of natural resources; to lessen the bank’s environmental impact, by reducing the • a one-page reduction in the after-sales kit of the product use of paper and other materials in issuing and distributing known as Proteção Financeira Itaucred (Itaucred Financial policies; to raise our clients’ awareness of the sustainability Protection). This has yielded a reduction of 600,000 printed issue, leading by example when it comes to sustainable actions; pages per year; and to standardize our communication with policyholders, by generating savings in the printing and logistics costs. Before • installation of a rainwater catchment reservoir. The water this initiative was launched, for an annual average of 82,000 obtained in this manner is reused to flush the toilets in building deals (policies and endorsements), we used to print an average A of the Tatuapé Administrative Center. This job is expected to of 1,827,000 sheets of paper (on both sides). As of now, for be completed in the first quarter of 2011; the same average number of deals, the number of documents printed is approximately 209,000; 124 Relationships Clients Stockholders Suppliers Government 94 100 112 113 116 • for the supply of the administrative buildings, diesel-fueled in the GHG Inventory. As a mitigating action, as of 2010, the generators are used. In the long term, these generators may bank has seven administrative buildings which receive clean contribute to atmospheric pollution, even though the bank energy generated at the Bandeirantes Thermoelectric Plant considers this a low-impact issue, due to their operational (Unibanco Administrative Center, Unibanco, EBI, EBV, CAO, ITM, characteristics. In order to establish this impact, the generators’ Tatuapé Administrative Center); the Tatuapé Administrative diesel fuel consumption is monitored and the data are reported Center started receiving this energy in May 2010. The plant is in the GHG Inventory. As a mitigating action, the Lavador de a result of a project developed by the then-Unibanco, and its Gases do Centro Administrativo Tatuapé (Tatuapé Administrative power is generated from the burning of methane produced Center Gas Washing project) is expected to be completed by from the decomposition of the waste placed in the landfill. 2011. With this initiative we expect to reduce emissions of (EN26 e EN28) SOx (up to 99%), NOx (5%) and particulate matter (80%) gases Transport-related impact caused by burning diesel fuel; The environmental impact caused by the means of • currently, organic waste originating from sweeping, from the transportation employed by the corporation encompasses toilets, and from non-recyclable materials is hauled to a sanitary emissions (GHG, NOx, SOx) and sound pollution. Both take landfill licensed by the Cetesb. Even though the volumes are not place during the transportation of employees, waste, cash bags, great, the hauling of waste to sanitary landfills may contribute, cargo and materials, and are not seen as very significant, due in the long term, to the overburdening of these disposal to the characteristics of the bank’s operations. Nevertheless, locations. In addition, the placement of waste in landfills causes emissions may cause an increase in atmospheric pollution. Data the production of gases (methane/CH4, carbon dioxide/CO2, on such emissions are part and parcel of the GHG Inventory, hydrogen sulfide/H2S, ammonia/Nh3) due to the decomposition which was undergoing production while this report was being of organic matter as a result of the actions of micro-organisms. prepared. As a mitigating step, measurement equipment In order to establish these impacts, the volume generated is (Ringelmann Smoke Chart) is used in the vehicles that serve monitored, and the data are reported in the GHG Inventory. The the Tatuapé Administrative Center: if the smoke color is not mitigating actions implemented are as follows: channeling most in compliance with the recommended standard, the supplier of the waste to recycling, which prevents it from being disposed is asked to implement corrective measures. (EN28 e EN29) of in landfills; hauling the waste generated in administrative (Environmental Management Approach) buildings in the São Paulo area to a covered landfill, which proper disposal of waste generated in the renovation work of the Products and services that are beneficial to the environment offices, which was previously left under the responsibility of the In order to generate benefits and environmental offsets, Itaú construction companies and is now collected by a recycled waste Unibanco has developed the following products and services: reduces the production of gases; implementing, in 2010, the contractor that delivers it to recycling companies; and selectively collecting waste at the main Itaú Unibanco facilities, with a Environmental Liability Insurance for Sudden and Gradual project for its expansion to other buildings; Pollution – offers coverage for the repair of environmental damage as well as damage sustained by third parties due • for the supply of the administrative buildings, electric energy to pollution events. Thus, the coverage offered enables the from the city grid is employed, which in the long term may policyholder to manage the environmental risk associated contribute to a shortage of natural resources, even though the with its operations covered by the policy, and, if pollution bank considers this a low-impact issue, due to its operational events covered by the policy occur, the policyholder shall characteristics. receive the full amount specified in the contract to use in the environment’s recovery, as well as in the repair of damage In order to determine this impact, the consumption of electric sustained by third parties as a result of such events which have energy from the grid is monitored and the data are reported taken place by accident. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations 117 Environment 125 125 Relationships Crediário Aquecedor Solar (Solar-Powered Heater Loan) – a the course of the renovations performed on the floors of reduced-rate loan for the purchase of solar-powered heaters. administrative buildings; MaxiConta Ambiental Empresas (Corporate Environmental • R$1,379,373.71 in the Lavador de Gases do Centro Administrativo MaxiAccount) – the first package of services and rates in the Brazilian Tatuapé, created to treat the bank’s emissions; market that is meant to promote an awareness of sustainability issues among clients. For this package, all operations are performed • R$1,130,700.00 in the establishment of teleconference rooms electronically; no paper is used. The reduced maintenance fee and the (cleaner technology, since it does away with the need to travel fact that we charge to provide banking services that are potentially to attend meetings); harmful to the environment promote environmental awareness. • R$365,688.66 in the Tatuapé Administrative Center ISO 14001 BNDES Automático e Programa BNDES Procopa Turismo – certification. Even though this is not included in the targets for (Automated BNDES and BNDES Pro World Cup Tourism 2010, the bank made great efforts to recommend the Tatuapé Program) – lines of credit provided by BNDES, which Administrative Center for ISO 14001 certification. As a goal for bring favorable conditions to the hospitality sector (bed & 2011, an audit is scheduled to take place in the first half of the year; breakfasts, hotels and resorts), for construction, extension, and modernization of the hospitality network (bearing in mind the • R$47,500.00 to hire the ICF consulting firm, to provide 2014 World Cup and the 2016 Olympic Games). Covered are the assistance in preparing the emissions inventory. (EN30) purchase of locally-produced machinery, equipment, furniture and software, labor and training, in addition to studies and In 2011, the bank intends to engage in the following projects: projects. The hospitality businesses that are certified as per the Sistema de Gestão da Sustentabilidade para Meios de Hospedagem • replacement of the R22 coolant in the Tatuapé Administrative of the Ministério do Desenvolvimento, Indústria e Comércio Exterior Center air conditioning equipment – which is detrimental to Brasil (Hospitality Business Sustainability Management System of the ozone layer – with the R407C coolant, which is considered the National Institute of Metrology, Standardization and Industrial environment-friendly; Quality) or level “A”- in energy efficiency as per Procel Edifica shall have access to special rates and terms. • completion of the Lavador de Gases do Centro Administrativo Tatuapé project. This has already been mentioned in EN26 and EN30; Contador de Sustentabilidade (Sustainability Meter) – this is an unprecedented initiative in the financial market. This tool • installation of a rainwater catchment reservoir. The water enables corporate clients to view the number of saved sheets obtained in this manner shall be reused to flush the toilets in of paper and the total amount of GHG emissions they have building A of the Tatuapé Administrative Center. This job is prevented by using electronic signatures in the course of their expected to be completed by the first quarter of 2011; foreign exchange operations. Since the launch of the electronic signature for exchange contracts in December 2009, over 3.5 • construction of three additional teleconference rooms; million sheets of paper have been saved, and according to our forecast, in 2011 this number will exceed 5.7 million. (FS8) • continuation of the project whereby the waste generated in the renovation work on certain floors of the buildings is properly Environment-related investments disposed of. This project originated from BIS. This is an initiative In 2010, Itaú Unibanco invested R$4,440,208.25 in environmental through which employees’ ideas with regard to sustainability are protection. reviewed. The initiative was implemented in 2010 in one center, and a few months later it was extended to other hubs which are • R$1,516,945.88 in treatment and disposal of building undergoing renovations, promoting sustainable attitudes among management waste, as well as the waste generated in employees, contractors, and suppliers; 126 Relationships Clients Stockholders Suppliers Government 94 100 112 113 116 Nature preserve Fundação Itauclube (Itauclube Foundation) owns a protected area, located at the Guarapiranga Country Club in the city of São Paulo, with 7,601 m² of built-up area and a total area of 73,276 m². The club is located on a spring of great importance for the region. Its conservation value is assured by Law No. 13.885/04, which regulates the M’Boi Mirim District Land Use Master Plan, and its listing as a “Leisure and Tourism Area” (ZLT-02), part of a classification system that establishes the standards for urban use and allocation in a legally protected nature preserve. (EN11) • selective collection of waste at the main Itaú Unibanco facilities with intended expansion to other buildings; • a rainwater catchment project is also being studied, to provide water for reuse in the Corporate Center cooling towers. Green IT The Green IT concept implemented at Itaú Unibanco is directly related to the bank’s sustainability. The projects developed by the information technology area in order to promote more efficient processes are underpinned by four pillars: • Products’ life cycle (and electronic waste management); • Energy efficiency; • Green workplace; • Green applications. Through actions implemented in keeping with these targets set forth for the IT area, it is possible to reduce the use of resources and properly manage the activities around which the bank’s operations are centered. We are aware that the technology environments’ improvement process is a long and time-consuming journey; it requires relentless research investment, review of the results achieved, and knowledge of the innovations available in the market. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Media and Public Relations 117 Environment 127 Electronic waste collection campaign carried out in the administrative buildings. 3,200 ITEMS were collected in the course of a number of awarenessraising campaigns to promote sustainable disposal among Itaú Unibanco employees 127 Social and cultural investments Social and cultural investments Supporting education and art • Fundação Itaú Social • Instituto Unibanco • Instituto Itaú Cultural Contributing to social development is a strategic sustainability issue for Itaú Unibanco. The investments made in the cultural and social areas – especially those geared towards the enhancement of education – are linked to the corporation’s vision to seek sustainable performance leadership. Our target is to employ the same expertise and efficiency that we employ in our business in the development of technologies and tools that may prompt the government, by means of partnerships, to develop public policies for Brazil’s sustainable growth. Likewise, it is our wish that these actions be absorbed by other corporations within civil society and replicated, yielding high-quality results. (SO5) (Economic Management Approach – Indirect Economic Impact) On the website Refer to the table that highlights the indirect economic impacts caused by the Fundação Itaú Social’s projects in 2010. The three institutions responsible for Itaú Unibanco’s social investment – Fundação Itaú Social, Instituto Unibanco and Instituto Itaú Cultural – act independently, although they complement each other. Primarily, Fundação Itaú Social and Instituto Unibanco study, develop, implement and promote innovative technologies and methods to improve childhood and youth education throughout Brazil. Instituto Itaú Cultural seeks to promote more democratic access to culture and arts. Specifically, it promotes continuing education programs, exhibits and similar events; it also promotes the work of new local artists. (Society Management Approach) In 2010, Itaú Unibanco’s social and cultural investments amounted to about R$241 million. Notable among these were the investments in education and culture, which amounted to R$126 million. (EC1 and EC8) On the iPad and in the Magazine Itaú Unibanco has made a strong commitment to the improvement of the quality of education in Brazil with the aid of Fundação Itaú Social and Instituto Unibanco. Read more about this in the article “Ator privado, missão pública” (Private Actor, Public Mission). Social and cultural investments Fundação Itaú Social presented in a quick and simple graph-like format that is accessible to the wider public. Focusing on basic education the teaching of the Portuguese language. One of the One of the main contributions of Itaú Unibanco in the most efficient tools Itaú Unibanco has to contribute to The Avaliação Econômica de Projetos Sociais (Economic social sphere has been the joint actions taken by Fundação the improvement of the quality of education in Brazil Evaluation of Social Projects) program, created with the Itaú Social along with the municipal, state and federal is the dissemination of knowledge and practices so support of the Risk and Financial Control area of the bank governments to develop educational policies to improve that members of the school community and public and applied in the programs developed by Fundação Itaú the quality of education. By means of ongoing projects authorities can develop mechanisms to improve Social, allows us to analyze the impact that a social project whose results are measured in the long term, the foundation education management. In this respect, Fundação Itaú may have on the lives of participants and calculate the has contributed to disseminating technologies, providing Social develops two important programs: Melhoria social return on the investments made. The initiative also In total, Fundação Itaú Social served 9,638,280 people through information and enhancing education management in Brazil. da Educação no Município (Municipal Education contributes, based on statistics methodologies, to enhancing its projects in 2010, 2.4 million of whom benefited directly while (Society Management Approach). Improvement) and Excelência em Gestão Educacional project management, making investments more transparent over 7.2 million benefited indirectly. The projects covered the (Excellence in Education Management). and planning future actions. following regions: São Paulo, Santa Catarina, Acre, Minas Gerais, Paraná, Rio de Janeiro, Ceará, Rio Grande do Sul, Goiás, Tocantins, One of the examples of the alliance between the different government spheres and Fundação Itaú Social is the Preparing municipal managers in the education field so In 2010, Fundação Itaú Social entered into a partnership Mato Grosso and Pernambuco. Additionally, there were some Escrevendo o Futuro program. Launched in 2002, it later they can put together and manage a Municipal Education with the federal government’s ENAP to train civil servants nationwide projects. (EC8 and SO1) became a public policy of the federal government in 2008 Plan, which ensures that children, teenagers, youngsters and from seven special ministries and departments on how to when it was renamed Olimpíada da Língua Portuguesa – adults have access to education, is the goal of Melhoria da economically evaluate social projects, which is an important We present below a summary of the Foundation’s performance Escrevendo o Futuro. By 2010, this program had already Educação no Município, which was developed in 1999. The measure to broaden the scope of the methodology used. in 2010: reached 99% of Brazilian municipalities. The objective 2010 edition of the program reached 16 municipalities in of this initiative is to improve the writing and reading the State of Paraná. skills of students from different education levels by first Performance of Fundação Itaú Social in 2010 (EC8 and SO1) improving the teaching skills of educators in the public The Excelência em Gestão Educacional program involves school system. Supported by the Ministry of Education teachers, school management centers, parents and (MEC), all 122,000 public schools received the Coleção communities and is focused on improving student learning da Olimpíada (Olympics Collection), which is used to skills. Implemented in 2009 and inspired by actions help teach students the skills to write different types developed in New York City, the three-year pilot project is of texts. At the end of 2010, 20 students from different being developed in partnership with the São Paulo State grades who had written on the topic O lugar onde vivo Education Department in ten schools in the eastern region (The place where I live) were awarded prizes. In the four of the city of São Paulo. The Excelência em Gestão Educacional categories – poems, literary memories, short stories and also promotes studies of successful initiatives implemented essays – 239,435 teacher registrations were received from in Brazil or abroad as a means to enhance thinking on school 60,123 public schools, involving 7 million students from management and the practices adopted. Social welfare winners of the national phase – students and teachers – Fundação Itaú Social also offers managers in the field of Subtotal were awarded gold medals, computers and printers. The education the Portal Itaú Fase (Itaú Phase Portal) (http:// Institutional expenditures schools these children attend were awarded computer ww2.itau.com.br/itausocial/fase/), which organizes the Total labs, consisting of ten personal computers and a printer, in results from national scientific studies on the factors that addition to books for their libraries. impede the quality of elementary education. Accordingly, Fundação Itaú Social Total (R$) Description and results Education 28,078,033.68 69 institutions and/or projects sponsored. Volunteer work 3,160,214.50 Sponsorship divided into three fronts: Prêmio Escola Voluntária (Volunteer School Award), support for employees to make donations and volunteer actions. Third sector management 1,825,677.93 Five institutions, projects and/or events supported to promote the improvement of the nonprofit sector. Health 2,140,137.36 16 institutions and/or projects sponsored to improve service quality or access to health services. 680,000.00 elementary, middle and high schools nationwide. The 20 18 institutions and/or projects sponsored to improve service quality and skills and ensure and improve access to different social welfare services such as the Associations of Parents and Friends of Exceptional Children, daycare centers and other social welfare institutions. 35,884,063.47 21,562,183.19 57,446,246.66 public policy makers, managers and society in general For 2011, we plan to implement the following projects: In odd-numbered years, the organization of workshops have more information to make decisions on the and training meetings is extremely important allocation of the funds invested in education. The portal’s • Olimpíada de Língua Portuguesa – Nationwide; to increase teacher training, evaluate the results content is easy to understand and regularly updated • Prêmio Itaú-Unicef – Nationwide; achieved and ensure an in-depth understanding of with all the latest scientific studies – and the results are • Evaluation Course (NGOs and Students) – Nationwide. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Fundação Itaú Social Instituto Unibanco Instituto Itaú Cultural Social and cultural investments Full-time education Itaú Criança Program Full-time education, which encourages activities in periods when students are not in the classroom, allows In 2010, another activity of great importance of Fundação the enhancement of interpersonal, cultural, scientific Itaú Social was the Ler Faz Crescer (Reading Makes You Grow) and artistic repertoires. For this reason, Fundação Itaú campaign, a national initiative disseminated by the Itaú Criança Social has been structuring, since 1995, programs that (Itaú Children) program to encourage reading by children of up stimulate the implementation of strategies that take to six years of age. Parents, educators, volunteers from social the concept of education beyond that provided by the institutions and other interested people had access to kits school and the family. containing four children’s books, a leaflet with tips for storytelling and a sticker to help publicize the idea. Kits can be The Prêmio Itaú-Unicef is granted every two years. Its requested free of charge at www.itau.com.br/lerfazcrescer and goal is to identify, recognize, publicize and stimulate the are also sent via mail. work of NGOs that contribute, in keeping with public education and social welfare policies, to the full-time Approximately 16 million books were made available and education of at-risk children and adolescents. In odd- over 4,000 Itaú Unibanco branches took part in the initiative. numbered years, the winning projects are selected and The bank employees were encouraged to strengthen their awarded. In even-numbered years, the educators from relationships with clients and the community in order to seek the organizations that participate in the award, public partners in the reading activities and to become ambassadors agencies and different segments of society are offered of this practice. At the branches, there are materials to inform onsite and distance training courses. In 2010, we held people of the importance of reading for children’s development in São Paulo the Colóquio de Educação Integral, which and to encourage the participation of members of society. was extended into four regional meetings and distance courses. Over the course of its existence, the Prêmio Itaú- The campaign focuses on reading for children of up to six years Unicef has received applications from more than 9,000 of age because it is at this age that personalities and habit projects containing innovative experiences developed in preferences, including cultural, are established. Studies show different learning venues. that the relationship with books in that period is a decisive factor for cognitive and affective development. For of all The Jovens Urbanos program is another important these reasons, Itaú Unibanco believes that the Ler Faz Crescer action in this area. It offers training to at-risk youths. campaign has significantly contributed to the transformation Its objective is to broaden the social and cultural of society and to the development of Brazil, communities and repertoire of the young so as to contribute to their people – because we know we will not be able to achieve personal and social transformation. To this end, sustainable development on our own. training courses are offered by NGOs located where they live. These training courses offer opportunities to Created in 2006 for the purpose of drawing the attention of explore the city and territory, give access to different society to the protection of the rights of children and adolescents, technologies through experiments in workshops as well as to help publicize and apply the Estatuto da Criança e and encourage the youths identify and implement do Adolescente (Statute of Children and Adolescents), the Itaú community intervention projects. Accordingly, Criança program is a successful example of joint mobilization by the program contributes to these youths staying employees, clients, partners and community. in or returning to school, to connect them to new educational processes, in addition to facilitating their Since the beginning of the program, partnerships with over 5,000 access to cultural and social resources that are available public schools have been established. These schools enriched in the city, thereby increasing the set of skills and their library collections with books collected at Itaú branches and abilities they will need for public life and work. acquired by Fundação Itaú Social and by the program’s partners. 132 Fundação Itaú Social 132 Instituto Unibanco 134 Instituto Itaú Cultural 136 At the end of 2010, we started the sixth edition of the program, which will include 16 hands-on NGOs and serve 960 youths from four different districts in the city of São Paulo (Lajeado, São Miguel Paulista, Grajaú and Ipiranga/ Heliópolis). Among the results achieved to date, we can highlight the average growth of 77% in the monthly income of participants, in addition to the 49% increase in their chances of finding a job, according to data from the economic evaluation carried out in 2010. In 2011, this methodology will be expanded by the institution via social franchising. Social mobilization The involvement of Itaú Unibanco employees in social projects and activities contributes, on an individual level, to the transfer of the bank’s vision of sustainability as well as to practical initiatives. The Itaú Voluntários (Itaú Volunteers) Program concentrates the actions of Fundação Itaú Social and Instituto Unibanco to meet the employees’ own interests in engaging in social projects, as well as to foster this practice. Launched in 2003, the initiative expanded gradually and had, at the end of 2010, more than 10,000 participants, namely employees, retirees and guests (friends and relatives) who engage in corporate and personal activities. Anyone interested can support the projects of Fundação Itaú Social, Instituto Unibanco and their partners, in addition to participating in the projects developed by other employees. The program also features the Portal Itaú Voluntario (Itaú Volunteer Portal) (www.ivoluntarios.org.br), a tool with more than 5,500 users and a monthly average of 32,000 page views (8,000 unique visitors), which promotes integration and the exchange of experiences among employees nationwide. In 2010, the corporate actions implemented by Fundação Itaú Social and Instituto Unibanco to promote volunteer work among employees included workshops on information technology, entering the job market, wise use of money and story-telling, in addition to these institutions’ large programs such as the Olimpíada da Lingua Portuguesa – Escrevendo o Futuro, Jovens Urbanos, Mentoria Jovem (Young Mentors) and Estudar Vale a Pena (Studying is Worthwhile). Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report R$ 241 million This was the total amount invested in social and cultural actions by Itaú Unibanco in 2010. 133 Social and cultural investments Instituto Unibanco This project provides tutoring for students who have just entered high school, allowing them to review the subjects Focus on high school education in which their achievement rates have been unsatisfactory The actions of Instituto Unibanco are focused on improving the since elementary and middle school. This tutoring is provided performance of young high school students in Brazilian public to avoid an inadequate knowledge base that would impede schools, as well as on reducing dropout rates in this stage. the understanding of new subjects, increasing the gap and discouraging the continuation of their studies. By developing technologies and methodologies that result in increased retention and better performance of young people Tutoring programs in Portuguese Language and Mathematics are at school, the institute targets one of the most important offered outside school hours. The tutors are university students Brazilian social problems: social inequality. from teaching courses who, by participating in the initiative, have the opportunity to improve their professional education. In 2010, The technologies and methodologies developed by the PEJ served 246 schools and benefited over 20,000 youngsters. institute aim to enhance policies and practices in effect in public schools and their efficiency is tested by impact The Jovem de Futuro (Youths with a Future) program, another evaluations carried out by independent evaluators. They are action developed by Instituto Unibanco, is also supported by state available for governments and civil society organizations and education departments. Its objective is to provide school managers are developed so as to allow their application in different and school community agents with proper training and tools to circumstances. establish a model of permanent mobilization and management in search of better performance results and graduation rates. Based An example of a joint action between the institute and on an evaluation method, educational institutions identify needs education departments, which is dedicated to improving and deficiencies in every aspect of the school life (average grades, students’ achievement rates and reducing dropout rates, is teacher profiles, management routines and facilities) and then PEJ, developed in 2007 by Instituto Unibanco in partnership determine their own planning matrices. In 2010, the program with the state education departments of Rio de Janeiro (State reached 98 public schools in Greater São Paulo, Vale do Paraíba (State of Rio de Janeiro), Vitória (State of Espírito Santo), Juiz de Fora of São Paulo), Rio de Janeiro (State of Rio de Janeiro), Greater Belo (State of Minas Gerais), Campinas (State of São Paulo) and Horizonte (State of Minas Gerais), and Greater Porto Alegre (State of Brasilia (Federal District). Rio Grande do Sul), impacting around 140,000 young people. Main projects developed by Instituto Unibanco in 2010 (EC8, SO1) Instituto Unibanco Total (R$) Description and results Jovem de Futuro program 18,209,370.00 The Jovem de Futuro program comprises actions, methods and technologies that offer high schools a comprehensive and participative management model focused on results. It is based on the training of a management group composed of members of the school community itself to create a Quality Improvement Plan to be implemented over three years with the technical and financial support of the institute. Currently, it is being developed in the following regions: Greater Belo Horizonte, Greater Porto Alegre, Greater São Paulo, Vale do Paraíba, and Greater Rio de Janeiro. In 2009, it was implemented in 86 schools with the participation of 69,553 students. In 2010, the project reached 138,143 students from 98 schools. Entre Jovens program 7,780,440.00 PEJ consists of technology created by Instituto Unibanco and developed in partnership with state education departments. It is aimed at facing the academic obstacles to attending high school (lack of the basic skills of elementary and middle school) that a large number of students face and that is responsible for poor performances and, in many cases, dropouts. PEJ offers complementary education to freshmen of public high schools through tutoring programs provided by university students from teaching courses. The periodic monitoring evaluations showed that the performance of the students who participate in the project is five points higher. This can be considered a very significant result given the short time of intervention: six months, with three months of activity in each school semester. Currently, it is in place in: Vitória (State of Espírito Santo), Juiz de Fora (State of Minas Gerais), Brasília (Federal District), Rio de Janeiro (State of Rio de Janeiro) and Campinas (State of São Paulo). In 2009, the program was implemented in 157 schools. In 2010, this number rose to 246 schools. 134 Fundação Itaú Social 128 Instituto Unibanco 134 Instituto Itaú Cultural 136 The technologies and methodologies developed by the institute aim to enhance policies and practices in effect in public schools. Instituto Unibanco Sponsored projects: many social education initiatives carried out by other organizations Total (R$) 3,489,945.00 Description and results Support for many social education initiatives carried out by other organizations. Financial education 684,146.00 The institute realized that to reduce school dropout rates advising younths in the public school system to continue studying and working was not enough; it was necessary to show them how to deal with money in a cautious way, helping to increase their family income and creating a perspective for the future based on financial planning. With this objective, Instituto Unibanco has, since 2008, been working on the Estratégia Nacional de Educação Financeira (National Financial Education Strategy – Enef ), established by the federal government in partnership with the main regulatory bodies of the financial system. The objective of Enef is to have financial education included as a school subject. For this purpose, the Diretrizes de Orientações Curriculares para Educação Financeira nas Escolas (Curricular Guidelines and Directions for Financial Education in Schools) were prepared – a document that has already been approved by the MEC. In the second phase of the Financial Education program, Instituto Unibanco prepared the teaching material for high school students and teachers. The first module deals with individual and family-level finances, the second deals with finances from society’s point of view, and the third addresses topics related to public policies. Centro de Estudos Tomas Zinner (Tomas Zinner Study Center) 682,320.00 Located in a large green area in Jardim Esmeralda, in São Paulo, near the Unibanco Administrative Center, the Centro de Estudos Tomas Zinner has computerized classrooms, reading areas and an auditorium with multimedia equipment. Created and supported by Instituto Unibanco, it develops activities aimed at testing and validating educational technologies to be applied in projects focused on improving the quality of high school education, reducing school dropout rates and including young people in the labor market, specifically in the sphere of the Lei de Aprendizagem (Learning Law). In addition to serving, through its pilot projects, as a laboratory for proposals to improve public policies in the education, the center promotes social and educational activities and its infrastructure is made available to the local community. Núcleo Amigo do Professor (Teacher-Friendly Center) Total 2,143,322.00 The Núcleo Amigo do Professor is a center of Plug Minas (Digital Education and Experimentation Center), which pursues social development through education combined with the use of Information and Communication Technology. The center’s objective is to reduce school dropout rates and increase the graduation and performance rates of students of public high schools in the State of Minas Gerais. All the courses are free of charge and certified by the Government of the State of Minas Gerais. 32,989,543.00 Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 135 Social and cultural investments Instituto Itaú Cultural Support for art and culture Founded in 1987, Instituto Itaú Cultural has a very important role in preserving Brazilian art and culture, and promoting artistic expression of new Brazilian artists and increasing public appreciation of the arts. The Rumos Itaú Cultural (Itaú Cultural Directions) program, developed continuously since 1997, is one of the main tools of the institute to promote reflection on Brazilian artistic production and to identify sources and new talent that may contribute to the development of a vision of national art. This nationwide program develops and promotes work in nine thematic areas: performing arts, cyberarts, visual arts, film and video, dance, cultural journalism, literature, music and cultural management research. In 2010, approximately 4,100 applications were received for projects in the areas of theater, cultural management, literary review, and music. Another important achievement of Instituto Itaú Cultural over the year was the increase of the Virtual Encyclopedias database, which is available to the general public at http:// itaucultural.org.br. The encyclopedias have the largest collection of visual arts in Brazil, with more than 28,000 images from the Enciclopédia Itaú Cultural de Artes Visuais Cybernetic art exhibit Emoção Art.ficial 5.0 (Art. ficial Emotion 5.0) (Itaú Cultural Encyclopedia of Visual Arts) and more than 5,353 entries (in Portuguese, Spanish, French and English), in addition to the content from the encyclopedias on Theater (878 entries), Brazilian Literature (332 entries) and Art and Technology – totaling 6,563 entries. The Rumos Itaú Cultural (Itaú Cultural Directions) program, developed since 1997, is one of the main tools of the institute to promote reflection on Brazilian artistic production. Itaú Cultural is also open for dialogue with society through temporary and permanent exhibits that can be visited free of charge at its headquarters at 149 Avenida Paulista. In 2010, the institute received 253,097 visitors including approximately 16,600 students from private and public schools. 136 Fundação Itaú Social Instituto Unibanco 128 134 Instituto Itaú Cultural 136 Main Projects developed by Instituto Itaú Cultural in 2010 (EC8 and SO1) Instituto Itaú Cultural Amount (in R$) Description 12,162,938.91 Exhibits are focused on Brazilian artistic production and its relations with international art. All of them offer educational services to elementary, middle and high schools, contributing to the education of the public. 607,705.83 Itaú Cultural’s programming is characterized by the diversity of contemporary artistic expression and by the constant search for innovation in terms of content and formats. The programming investigates boundaries instead of putting on only well-known productions, and it is characterized as a place for artistic experimentation. Courses/seminars 2,459,369.15 Education on contemporary art and the enhancement of the cultural and artistic knowledge of the public are the objectives of this type of action. Rumos (Directions) program 6,787,516.02 The objective of this program is to map, encourage and publicize artistic production in Brazil, in addition to educating and informing cultural agents (artists, producers, critics, researchers and curators). It also carries out a comprehensive public policy project for art and culture in Brazil. In 2010 we worked in the Art and Technology, Visual Arts, Film and Video, Music, Culture and Art Education, Research, Dance, Theater, Cultural Journalism and Literature prospectuses. Enciclopédias IC (IC Encyclopedia) 1,767,429.39 Brazilian art is the raw material of the institution’s virtual encyclopedia. Created in 1987 as a computerized database, and operating today in an encyclopedia format, it offers students, teachers, art and culture professionals, among others, biographical and chronological data, images of artworks and historical, conceptual and critical texts about representatives of visual arts, literature, theater and techno-art, in addition to art concepts and artistic movements. Educação Cultural (Cultural Education) 1,585,326.93 Among other things, it promotes activities that stimulate awareness, understanding, idea formulation and interaction of the public with artistic works and concepts that are present in the exhibits. It works toward public appreciation cultural production and its relation with the education field. Observatório (Observatory) 1,498,491.90 It promotes regular reflection on culture and subsidizes the preparation of multiple policies for the sector through the organization of meetings, publications and projects. It openly discusses the interactions between culture, arts, economy and society. Exhibits (visual arts, art and technology, music, dance, collections and audiovisual) Performances (dance, theater and music) Total 26,868,778.13 Itaú Cultural also stands out for managing Itaú Numismática (Itaú Numismatics), a collection of more than 6,800 pieces, including coins, medals, awards of the holding company and the Coleção Brasiliana (Brasiliana Collection), with approximately 2,150 items. In 2010, Itaú Cultural carried out 456 activities, 371 of which were national and 85, international. A total of 25,673 cultural products were distributed, mainly books, DVDs and art catalogues. In this One important achievement of Instituto Itaú Cultural in 2010 was the expansion of the Virtual Encyclopedias database, which has the largest collection of visual arts works in Brazil. period, the institute signed contracts with 111 new TV partners. The total investment via Lei Rouanet (Rouanet Law), which sets public policies relating to national culture, was R$26,978 million (Article 26 of the Law). Also, R$17,836 million arising from other resources was invested. (EC8, SO1) Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 137 Awards and recognitions The main awards and recognitions received by Itaú Unibanco are: (Profile 2.10) Performance and Efficiency • Considered the Best Private Banking in Brazil by Euromoney magazine. • Considered the Best Domestic Cash Manager in Brazil by Euromoney magazine. • Considered the Best Private Banking in Chile by Euromoney magazine. • In Latin America’s Best Managed Companies Awards granted by Euromoney magazine, Itaú Unibanco came first in the Banking and Financial category. • Winner of the Apimec in the Best Publicly-Held Company category. • Considered the Best Bank in Latin America and the Best Bank in Brazil in the Awards for Excellence granted by Lula, Roberto Setubal and Mino Carta at the Most Admired Companies in Brazil award ceremony. Euromoney magazine. • In the Top 1000 World Banks Awards granted by The Banker, Itaú Unibanco came first in the ranking of the 25 Latin American Banks. In 2010, Itaú Unibanco was granted awards in the Performance and Efficiency, Brand and Image, Information Technology and Internet, Sustainability and Human Resources categories. 138 Awards and recognitions 138 • Winner in the Grand Prix for the Best Investor Relations (IR) Program of large cap companies of the IR Magazine Awards Brazil, granted by IR Magazine, Revista RI magazine and by the Brazilian Institute of Investor Relations (Instituto Brasileiro de Relações com Investidores). • In the Top 100 Latin American Banks Awards granted by The Banker, Itaú Unibanco was recognized as the top bank based on Capital Tier I. • In the Most Admired Companies in Brazil Awards organized by Carta Capital magazine, the bank came in first in the banking category and sixth in the overall ranking. Roberto Setubal, Chief Executive Officer of Itaú, came in fourth in the Most Admired Corporate Leaders category. • Named, in a survey conducted by Institutional Investor In 2010, Itaú Unibanco was considered the Most Valuable Brand in Brazil by Interbrand (1st place in the ranking with a brand value of US$20.651 billion). • Winner in the categories Most Sustainable Bank in Emerging magazine, as the best bank in Latin America in terms of Markets and Most Sustainable Bank in Latin America in the FT investor relations. Sustainable Awards organized by the Financial Times newspaper and the IFC. • Awarded by the IR Magazine Awards Brazil 2010, of IR Magazine, in two categories: Grand Prix, as the Best IR • Ranked for the 6th consecutive time by Latin Finance magazine and Program of large cap companies, and Best Performance in Management & Excellence S.A. consulting firm among the Most IR by a CEO or CFO. Sustainable Banks in Latin America in the Large Banks category. • IBBA was recognized by Institutional Investor magazine as • Included for the 5th consecutive year among the companies in having the best research team in Brazil, proving the quality the Guia Exame de Sustentabilidade (Sustainability Exame Guide) of its staff and the commitment to its clients. organized by Exame magazine. Brand and image • Awarded for the 3rd consecutive year the Prêmio Época de • I taú Unibanco was considered the Most Valuable Brand in Mudanças Climáticas (Época Climate Change Award) granted Brazil by Interbrand (1st place in the ranking with a brand by Época magazine. The bank was among the ten companies value of US$20.651 billion). named Leaders in Climate Policies. Information Technology and Internet Human resources • In the Green Enterprise IT Award granted by the Uptime • Awarded for the 2nd time in The Best 100 Companies to Work Institute, Itaú Unibanco was recognized in the Joint IT and For survey, conducted by the Great Place to Work (GPTW) Facilities Innovation category. international consulting firm in partnership with Época magazine. Sustainability • Ranked among the 50 Best Companies for Executives to Work For • Selected for the 11 consecutive year for inclusion in the th portfolio of the DJSI in its 2010/2011 edition. • Selected for the 6th consecutive year for inclusion the portfolio of the ISE of BM&FBovespa. according to the ranking organized by the GPTW consulting firm in partnership with Época magazine. • Ranked 7th in the Empresa dos Sonhos dos Jovens (Company of Young People’s Dreams) award granted by Cia. de Talentos. Itaú Unibanco was the only financial institution included. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 139 Appendices The Annual Report of Itaú meets the requirements for the GRI application level A+. G3 Management Approach Not required Performance Indicators & Sector Supplement Performance Indicators Report fully on a minimum of any ten Performance Indicators, including at least one from each of the following: society, economy, and environment. B+ Management Approach Disclosures for each Indicator Category Report fully on a minimum of any 20 Performance Indicators, at least one from each of the following: economy, environment, human rights, labor, society, and product responsibility. A A+ Same as requirement for Level B Management Approach disclosed for each Indicator Category Respond on each G3 core and sector supplement* indicator with due regard to the materiality principle by either: (a) reporting on the indicator or (b) explaining the reason for its omission. Report Externally Assured G3 Profile B Report on all criteria listed for level C+:1.2; 3.9, 3.13; 4.5 to 4.13, 4.16 to 4.17 Report Externally Assured C+ Report Externally Assured Content of the Report C Report on: 1.1; 2.1 to 2.10; 3.1 to 3.8, 3.10 to 3.12; 4.1 a 4.4, 4.14 to 4.15; Profile 1. Strategy and Analysis Indicator Description 1.1 Message from the CEO Fully 1.2 Description of key impacts, risks, and opportunities Fully Reason for omission Global Compact 9, 11, 17 _ _ 11, 14 _ _ Reason for omission Global Compact Reported Page/Online PDF 2. Organizational Profile Indicator Description Reported Page/Online PDF 2.1 Name of the organization Fully 19 _ _ 2.2 Primary brands, products, and/or services Fully 21 _ _ _ _ _ _ 24 2.3 Operational structure of the organization Fully 2.4 Location of organization’s headquarters Fully 140 Global Reporting Declaração de Garantia Initiative (GRI) Cross Index (assurance statement) Itaú Unibanco 140 152 We are a financial holding controlled by IUPAR, an investment company that is jointly controlled by (i) Itaúsa, a holding company controlled by the members of the Egydio de Souza Aranha family and (ii) E. Johnston, a holding company controlled by the former majority stockholders of Unibanco, the Moreira Salles family. Itaúsa also directly holds 36.2% of the entity’s common shares. Our operating segments are: (i) Commercial Banking (comprising insurance, private pension plans and capitalization products, credit cards, asset management and many credit products and services for individuals and small and medium sized companies); (ii) Itaú BBA (large companies and investment banking) and (iii) Consumer Credit (financial products and services for non-account holders). => item 7.2 : Joint Ventures Itaú Unibanco has joint venture and partnership contracts with more than 300 retailers in Brazil, serving more than 17.2 million clients on December 31, 2009. The consumer credit joint venture portfolio totaled R$ 7,941 million on December 31, 2009. Itaú Unibanco achieved a strong presence in the consumer financing segment by means of strategic alliances with leading retailers in Brazil, such as Magazine Luiza, Marisa, Pão de Açúcar (CBD), Ponto Frio (Globex Utilidades S.A.), Lojas Americanas S.A. and Ipiranga (Ultrapar Participações S.A.). Since 2001, when the first partnerships were established, these alliances have been supporting consumer financing by means of many products, such as co-branded credit cards, private label cards, personal loans and insurance. 2) Business chapter: segmentation according to the 2009 Reference Form (CVM 480) and the Complete Financial Statements (2010). 19 Independent Auditors’ Limited Assurance Report GRI Application Level Check 155 157 Reason for omission Global Compact 21, 24 _ _ Fully 21 _ _ Fully 24 _ _ Indicator Description Reported 2.5 Countries where the organization operates, and names of countries with major operations Fully 2.6 Nature of ownership and legal form 2.7 Markets served Page/Online PDF 19, 22, 36 2.8 Scale of the reporting organization Fully The limitation provided for in the GRI guidelines – Definition of Content, Quality and Scope of the Report will be observed within five years to include all the organizations that are subject to the control or significant influence of Itaú Unibanco Holding S.A. _ _ 2.9 Significant changes during the reporting period Fully 11 and Online version _ _ 2.10 Awards received in the reporting period Fully 138 _ _ Reason for omission Global Compact 3. Report Parameters Indicator Description Reported Page/Online PDF 3.1 Reporting period for information provided Fully 6 _ _ 3.2 Date of most recent previous report Fully 6 _ _ 3.3 Reporting cycle Fully 5, 6 _ _ 3.4 Contact point for questions regarding the report or its contents Fully 6 _ _ 3.5 Process for defining report content Fully 6 _ _ 3.6 Boundary of the report Fully 6, 24 _ _ 3.7 Statement of any specific limitations on the scope or boundary of the report Fully The limitation provided for in the GRI guidelines – Definition of Content, Quality and Scope of the Report will be observed within five years to include all the organizations that are subject to the control or significant influence of Itaú Unibanco Holding S.A. _ _ 3.8 Basis for preparing the report Fully 6 _ _ _ _ 6 3.9 Data measurement techniques and the bases of calculations Fully The mediation techniques used in the estimates for compiling indicators and other information in the report can be found in the footnotes to these indicators. The calculation bases used in the estimates for compiling indicators and other information in the report can be found in the footnotes to these indicators. The hypotheses and techniques used in the estimates for compiling indicators and other information in the report can be found in the footnotes to these indicators. 3.10 Re-statements of information provided in earlier reports Fully None _ _ 3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report Fully 6 _ _ 3.12 Table identifying the location of the Standard Disclosures in the report Fully 6 _ _ Fully Itaú Unibanco Holding S.A. Audit Committee was favorable to the assurance services for the 2010 Annual Sustainability Report provided by PwC, particularly considering that there is no impediment to the service according to the rules contained in the conglomerate’s Internal Circular that governs the contracting of services to be provided by the independent auditor. Item 2 of the Reference Form (CVM 480) mentions the relationship of Itaú Unibanco with the independent auditors. Further details on page 4 of link: http://ww13.itau.com.br/PortalRI/ HTML/port/download/formulario_ref_2009.pdf _ _ 3.13 Policy and current practice with regard to seeking external assurance for the report Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 141 Indicator Description Reported Page/Online PDF Reason for omission Global Compact Reported Page/Online PDF Reason for omission Global Compact 4. Governance, Commitments, and Engagement Indicator Description 4.1 Governance structure of the organization, including committees under the highest governance body Fully 37 _ _ 4.2 Chair of the highest governance body Fully The President of the Board is not the CEO of the organization _ _ 4.3 Members of the highest governance body that are independent and/or non-executive members Fully 38 _ _ _ _ _ _ _ _ _ _ 99, 112 4.4 4.5 Mechanisms for stockholders and employees to provide recommendations Linkage between compensation and the organization’s performance (including social and environmental performance) Fully Fully Every employee has access to a communication channel that is made available by the Investor Relations area through which it is possible to contact our Board of Directors. Additionally, it is worth noting that any employee has free access to the corporate e-mail addresses of the members of the Board. We also have an Ombudsman service, whose main function is to receive reports on ethical deviations and properly forward them in accordance with the type of matter. We are constantly reviewing our practices, including with respect to the implementation of the best way to establish the communication between employees and our management. Item 13 of the Reference Form (attachment 24 of CVM Instruction No. 480/09) addresses the matter in detail. Basically, when determining Itaú Unibanco’s compensation policy, we take into consideration the values that are in line with those adopted by the market, Itaú Unibanco’s strategy and the proper management of risks as time goes by so as to not to encourage behaviors that increase risk exposure to beyond the levels that are considered prudent. Itaú Unibanco privileges variable compensation, which corresponds to a significant part of total compensation paid to management staff. The governance structure for determining compensation provides for clear and transparent processes. The prevention of conflict of interests in the Board is provided for in the Board of Directors’ Internal Regulations. In accordance with the Regulations, Directors must act independently, applying the following rules: (i) The members of the Board cannot take part in resolutions related to matters in which their interests conflict with those of the Company. Each member is responsible for communicating to the Board their conflict of interest as soon as the matter is included in the agenda or proposed by the Chairman of the Board and, in any case, before the beginning of any discussion on the matter. 4.6 Processes in place to ensure conflicts of interest are avoided Fully (ii) In the first meeting following their election, the Director must communicate to the Board: (a) the main activities they develop outside the Company, (b) their participation on the boards of other companies, and (c) their commercial relationship with companies of the Itaú conglomerate, including whether they provide services to these companies. This information must be presented annually and whenever there is a new event that requires an update of this type of information. The Directors can serve on no more than four (4) boards of directors of companies that are not part of the same economic conglomerate. For the purposes of this limit, the exercise of this function in philanthropic entities, clubs or associations will not be considered. This limit can be exceeded upon the approval of the Appointment and Corporate Governance Committee. (iii) If a member of the Board or a company under their control or management carries out a transaction with companies of the Itaú Unibanco conglomerate, the following rules must be observed: (a) the transaction must be carried out on an arm’s length basis, (b) if it is not a routine transaction or a service provision, there must be reports issued by first-class entities proving that the transaction was carried out on an arm’s length basis, (c) the transaction must be reported to the Appointment and Corporate Governance Committee, and (d) the transaction must be carried out through the usually proper channels in the hierarchy of the Itaú Unibanco conglomerate. 35 4.7 Qualifications of the members of the highest governance body Fully 142 Global Reporting Declaração de Garantia Initiative (GRI) Cross Index (assurance statement) Itaú Unibanco 142 152 The Board of Directors must annually appoint the members who will compose the Compensation Committee. The appointments of Directors Pedro Moreira Salles, Alfredo Egydio Arruda Villela Filho, Henri Penchas, Israel Vainboim and Pedro Luiz Bodin de Moraes to compose the Compensation Committee are hereby ratified. The decisions made by the Compensation Committee at the meeting held on February 16, 2011, at which the compensation packages of the executives mentioned in items “II” and “III” above are also ratified. Finally, the Directors approved that the creation of the Compensation Committee and the new division of authorities between the committees of the Board of Directors will be reflected in the Company’s Corporate Governance Policy and the content of which should be subsequently ratified by this Board. Independent Auditors’ Limited Assurance Report GRI Application Level Check 155 157 Reason for omission Global Compact 31, 53, 94 _ _ Fully 32 _ _ Fully The information contained in item 12 – General Meeting and Management, item c) of the 2009 Reference Form (CVM 480) partially meet the requirements of this indicator, particularly with respect to environmental and social performance. Further details on pages 141 to 180 of link: http://ww13.itau.com.br/PortalRI/HTML/port/download/formulario_ref_2009.pdf. The procedures for the self-assessment by the Board of Directors in the environmental and social aspects will be reviewed in 2011. _ _ _ _ _ _ _ _ _ _ _ _ Indicator Description 4.8 Statements of mission and values, codes of conduct, and relevant internal principles Fully 4.9 Responsibilities for the implementation of economic, environmental, and social policies 4.10 Processes for evaluating the highest governance body’s own performance Reported Page/Online PDF 43 4.11 Explanation of whether and how the precautionary principle is addressed by the organization Fully 4.12 Externally developed social charters, principles, or other initiatives Fully Risk management is considered an essential instrument by Itaú Unibanco for optimizing the use of capital and selecting the best business opportunities, aimed at obtaining the best risk-return ratio for our stockholders. To learn more about Itaú Unibanco’s risk management, please see pages 163-166 of our financial statements: http://ww13.itau.com.br/PortalRI/HTML/port/ infofinan/demon/Dcc_e_MDA/df311210/irr311210.pdf 5, 42 Febraban: Sector Sustainability Officer Associação Viva o Centro (Long Live Downtown Association): Vice Chairman Associação Paulista Viva (Lively Paulista Association): Vice Chairman Associação Amigos Pça Victor Civita (Association of the Friends of the Victor Civita Park): vice chairman of the Board. Equator Principles: Steering Committee UNEP-FI: Latin America Task Force Latin American Forum on Sustainable Finances (LASFF) Itaú participates in the activities of the forum – coordinated by Fundação Getúlio Vargas, developed for the purpose of fostering sustainable finances in Latin America. Center of Reference in Sustainability (FDC) 4.13 Memberships in associations and/or national/ international organizations Fully Itaú is a member of the Center of Reference in Sustainability of Fundação Dom Cabral (Dom Cabral Foundation), which promotes studies and debates on sustainable development. It is also a member of the Responsible Retail Development Center of the same institution, whose purpose is to generate knowledge focused on retail companies and those who are part in its supply chain. Empresas pelo clima (Companies for the climate) Itaú is a founding member of Empresas pelo Clima. Launched on October 8, 2009, Empresas pelo Clima is the first Brazilian platform aimed at creating the regulatory framework in the process for economic adaptation to climate change. By adhering to the platform, the companies take on the commitment to publish their inventories of greenhouse gases in accordance with the methodology of the GHG Protocol Brazilian Program, and to develop policies and plans for managing polluting gases that ensure competitiveness, innovation and stimulation to the stand in favor of a low carbon economy in Brazil. – AMCHAM – Brazilian-American Chamber of Commerce. – Câmara Portuguesa (Portuguese Chamber) – Dutcham – Centro Paulista Viva (Lively Paulista Center) – CEBRI 4.14 List of stakeholder groups engaged by the organization Fully 4.15 Basis for identification and selection of stakeholders with whom to engage Fully 6 6 Our process for identifying and selecting stakeholders is based on the AA1000 standard. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 143 Appendices Indicator Description Reported Page/Online PDF Reason for omission Global Compact _ _ Proprietary information _ Reason for omission Global Compact – – – – 6,12, 97, 106, 107 Among the most important factors in the quality of a sustainability report are stakeholder inclusiveness and materiality, that is, the prioritization of essential topics and subjects for conducting business from the point of view of the company itself and society. Among the Company’s main stakeholders are the clients, employees, stockholders, suppliers, government and media. Problems with the public rainwater runoff system under Carnaubeiras street, located near the Itaú Unibanco Corporate Center, were detected. To renovate the entire damaged system, Itaú Unibanco entered into a partnership with the Municipal Government of São Paulo. 4.16 Approaches to stakeholder engagement Fully 4.17 Key topics and concerns that have been raised through stakeholder engagement Partially The damage detected could result in the leakage of the collected rainwater, evolve into cracks and cause the street to sink, harming the people who live there and impairing the circulation of vehicles and pedestrians in the region, including homeless people. We held a meeting for the community with the presence of the company responsible for the renovation works, the city office of the district of Jabaquara, the Traffic Engineering Company (CET), Sabesp (the water utility), Eletropaulo (the electricity company) and all the residents and shop owners in the region who could be affected. At this meeting, the diagnosis of the problem, the risks involved, the proposed solution and the problems entailed were presented. The strategy for the performance of the works aimed at mitigating all risks was discussed and approved. At the end, we delivered a folder with a summary of the most relevant information on the project. There is not a pre-determined frequency. 30 Management approach Indicator EC EN Description Reported Page/Online PDF Economic Performance Fully Market Presence Fully Indirect Economic Impacts Fully – – Materials Fully – – Energy Fully – – Water Fully – – Biodiversity Fully – – Emissions, Effluents and Waste Fully – – Products and Services Fully – – Compliance Fully – – Transport Fully – – General Fully – – 144 Global Reporting Declaração de Garantia Initiative (GRI) Cross Index (assurance statement) Itaú Unibanco 144 152 12, 16, 56, 129 16, 119, 121, 125 Independent Auditors’ Limited Assurance Report GRI Application Level Check 155 157 Indicator LA HR SO PR FS Description Reported Page/Online PDF Reason for omission Global Compact Labor Fully – – Labor/Governance Relations Fully – – Occupational Health and Safety Fully – – Training and Education Fully – – Diversity and Equal Opportunities Fully – – Procurement Process Fully – – Non-discrimination Fully – – Freedom of Association Fully – – Child Labor Fully – – Forced/Slave Labor Fully – – Security Practices Fully – – Indigenous Rights Fully – – Community Fully – – Corruption Fully – – Public Policy Fully – – Anti-Competitive Behavior Fully – – Compliance Fully – – Client Health and Safety Fully – – Product and Service Labeling Fully – – Communication and Marketing Fully – – Client Privacy Fully – – Compliance Fully – – Social and Environmental Policy Fully – – Audit Fully – – Products and Services Fully – – 93, 94, 95, 97 98, 115 16, 53, 103, 115, 116, 129, 130 28, 56, 100, 103, 110, 113 16, 30, 51, 59, 60, 63, 70, 93, 118 Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 145 Economic Performance Indicators Indicator Description Reported Page/Online PDF Reason for omission Global Compact – – – 7 Economic Performance 23 EC1 Core Direct economic value generated and distributed. Fully EC2 Core Financial implications and other risks and opportunities due to climate change. Fully EC3 Core Coverage of the defined benefit plan obligations. Fully Online version – – EC4 Core Significant financial assistance received from government. Fully The bank received R$61,722,894.77 in 2010. The amount reported refers to the Programa de Alimentação do Trabalhador (Workers’ Meal Program), donations to the Children’s and Adolescents’ Fund, article 1845 of the Rouanet Law, sponsorships granted to sports projects and extension of maternity leave. – The standard entry level salary is the same as the local minimum salary of R$510.00. The lowest salary, of R$510.00, is paid to the Sales Assistant position in Porto Velho, State of Rondônia. Not available 1 Page 70 of the Financial Statements: http://ww13.itau.com.br/PortalRI/HTML/port/infofinan/ demon/Dcc_e_MDA/df311210/DCC311210.pdf; and investment in communities reported on page 128-137. 73, 87 The bank was not able to quantify the financial implications related to the topic. Market Presence EC5 Additional Range of ratios of standard entry level salary compared to local minimum salary. EC6 Core Policies, practices, and proportion of spending on locally-based suppliers. EC7 Core Local hiring of employees. Partially Fully 113 - - Partially 95 Not available 6 Indirect Economic Impacts EC8 Core Impact of infrastructure investments provided for public benefit. Fully 129, 131, 134, 137 and online version – – EC9 Additional Description of significant indirect economic impacts. Fully Online version – – Reason for omission Global Compact Environmental Performance Indicators Indicator Description Reported Page/Online PDF Materials EN1 Core Materials used by weight or volume. Fully 120 – 8 EN2 Core Percentage of materials used that are recycled input materials. Fully 120 and online version – 8 and 9 EN3 Core Direct energy consumption by primary energy source. Fully 121 – 8 EN4 Core Indirect energy consumption by primary source. Fully 122 – 8 and 9 EN5 Additional Energy saved due to conservation and efficiency improvements. Fully 122 – 8 EN6 Additional Initiatives to provide low energy consumption based products and services. Fully 64, 122 – – Energy 146 Global Reporting Declaração de Garantia Initiative (GRI) Cross Index (assurance statement) Itaú Unibanco 146 152 Independent Auditors’ Limited Assurance Report GRI Application Level Check 155 157 Reported Page/Online PDF Reason for omission Global Compact – – Indicator Description EN7 Additional Initiatives to reduce indirect energy consumption and reductions achieved. Fully 121 EN8 Core Total water withdrawal by source. Fully 120, 121 EN9 Additional Water sources significantly affected by withdrawal of water. Fully 120 8 EN10 Additional Percentage and total volume of water recycled and reused. Fully 120, 121 8 Water 8 and 9 Biodiversity EN11 Core Location and size of land owned. Fully 127 8 EN12 Core Significant impacts of activities, products, and services on biodiversity. Fully Currently, the impacts of Itaú Unibanco’s activities on biodiversity are not monitored since most of its operations are located in urban areas. 8 EN13 Additional Habitats protected or restored. Fully Currently, there no habitats protected or restored by Itaú Unibanco since most of its operations are located in urban areas. – EN14 Additional Strategies for managing impacts on biodiversity. Fully Most of our activities are conducted in urban areas; for this reason, the bank does not have a strategy to mitigate impacts on biodiversity. – EN15 Additional Number of International Union for Conservation of Nature (IUCN) Red List species and other conservation list species. Fully There is no system to monitor the IUCN Red List species since most of the bank’s activities – performed within administrative buildings and bank branches – are carried out in urban areas. – Emissions, Effluents and Waste EN16 Core Total direct and indirect greenhouse gas emissions. Fully 123 – 8 EN17 Core Other relevant indirect greenhouse gas emissions. Fully 123 – 8 EN18 Additional Initiatives to reduce greenhouse gas emissions and reductions achieved. Not available 7, 8 and 9 EN19 Core Emissions of ozone-depleting substances. Fully 124 – 8 EN20 Core NOx, SOx and other significant air emissions. Fully 124 – 8 EN21 Core Total water discharge by quality and destination. Fully 121 – 8 EN22 Core Total weight of waste by type and disposal method. Fully 119, 120 – 8 EN23 Core Total number and volume of significant spills. Fully The bank’s activities did not cause any significant spills in the reported period. EN24 Additional Weight of transported waste deemed hazardous. Fully 119 EN25 Additional Protected status and biodiversity value of water bodies and related habitats. Fully Itaú Unibanco does not significantly affect water bodies and/or habitats as a result of discharge of water or runoff. The holding bank only generateshousehold effluents. Partially 121 ,122, 123 Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 8 – – – 147 Appendices Indicator Description Reported Page/Online PDF Reason for omission Global Compact Partially 125, 126 Not available 7, 8 and 9 86, 199 – 8 and 9 Products and Services EN26 Core Initiatives to mitigate environmental impacts. EN27 Core Percentage of products and packaging materials that are reclaimed by category of product. Fully Monetary value of fines and total number of non-monetary sanctions for noncompliance with environmental laws. Fully The bank did not receive significant fines or non-monetary sanctions for non-compliance with environmental laws and regulations in the reporting period. 8 Environmental impacts of transporting products and members of the workforce. Fully 125 – 8 Total environmental protection expenditures and investments. Fully 126 – 7, 8 and 9 Compliance EN28 Core 125 Transport EN29 Additional General EN30 Additional Labor Practices and Decent Work Performance Indicators Indicator Description Reported Page/Online PDF Reason for omission Global Compact Labor LA1 Core Total workforce by employment type, employment contract, and region. Partially 94, 95 Not available – LA2 Core Total number and rate of employee turnover by age group, gender, and region. Partially Online version Not available 6 LA3 Additional Comparison of benefits provided to fulltime employees and temporary employees. Fully Online version – – Labor/Governance Relations LA4 Core Percentage of employees covered by collective bargaining agreements. Fully All Itaú Unibanco employees based in Brazil are covered by collective bargaining agreements. LA5 Core Description of notice period(s) (terms and procedures). Fully Online version – – 1, 2 and 3 Occupational Health and Safety LA6 Additional Percentage of total workforce represented in formal health and safety committees. Fully Online version – 1, 2 and 3 LA7 Core Rates of injury, occupational illnesses and lost days of employees and outsourced workers. Fully Online version – 1 LA8 Core Education, prevention, and risk control programs. Fully Online version – 1 LA9 Additional Health and safety topics covered in formal agreements with trade unions. Fully Online version – 1 Not available 6 Training and Education LA10 Core Average hours of training per year. Partially 148 Global Reporting Declaração de Garantia Initiative (GRI) Cross Index (assurance statement) Itaú Unibanco 148 152 97 and online version Independent Auditors’ Limited Assurance Report GRI Application Level Check 155 157 Reported Page/Online PDF Reason for omission Global Compact Indicator Description LA11 Additional Programs for skills management, lifelong learning and retirement. Fully Online version LA12 Additional Percentage of employees receiving regular performance reviews. Fully 95 – – – Diversity and Equal Opportunities LA13 Core Composition of senior management and boards and proportion by group and gender. Fully 98 and online version – 1 and 3 LA14 Core Ratio of basic salary of women to men by employee category. Fully Online version – 1, 2 and 3 Reason for omission Global Compact Human Rights Indicator Description Reported Page/Online PDF Procurement Process HR1 Core Description and percentage of policies and guidelines to address all aspects of human rights in investments. HR2 Core Contracted companies that have undergone human rights screening. HR3 Additional Policies for evaluating and treating performance in human rights. Fully Partially There were no significant investment contracts with relevant majority ownership interest to which the organization is a party. 113, 114 – Not available 1, 2, 3, 4 Fully There were no training programs on human rights in the reporting period. – Fully Online version – 1, 2, 3 Freedom of association policy and level of its application. Fully Online version – 1, 2, 3 Measures taken to contribute to the abolition of child labor. Fully 114 – 1, 2, 3 Measures taken to contribute to the elimination of forced labor. Fully 114 – 1, 2, 3 Security personnel trained in the policies concerning aspects of human rights. Fully 115 – – Total number of incidents of violations involving rights of indigenous people and actions taken. Fully There were no incidents involving indigenous rights in the reporting period. Non-discrimination HR4 Core Total number of incidents of discrimination and corrective actions taken. Freedom of Association HR5 Core Child Labor HR6 Core Forced/Slave Labor HR7 Core Security practices HR8 Additional Indigenous Rights HR9 Additional Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report – 149 Appendices Indicator Description Reported Page/Online PDF Reason for omission Global Compact Programs and practices to evaluate and manage the impacts of operations on communities. Partially 131, 134, 137 and online version Not available 10 Society Community SO1 Core Corrupção 10 SO2 Core Business units analyzed for risks related to corruption. Partially 95 Not available 10 SO3 Core Percentage of employees trained in anticorruption policies and procedures. Fully 95 – 10 SO4 Core Actions taken in response to incidents of corruption. Partially 95 Not available 10 Partially 129 and online version Not available 10 Public Policies SO5 Core Public policy positions. SO6 Additional Policies for financial contributions to political parties, politicians or institutions. Fully 116 SO7 Additional Number of legal actions for anticompetitive behavior. Fully In 2010, no legal actions were pending or terminated. Description of significant fines and total number of non-monetary sanctions. Fully There were no significant fines in the administrative, judicial and arbitration spheres nor non-monetary sanctions. Compliance SO8 Core Product Responsibility Indicator Description Reported Page/Online PDF Reason for omission Partially 109 Not available Client Health and Safety PR1 Core Policy for preserving consumer health and safety during the use of the product. PR2 Additional Non-compliance concerning impacts of products and services. Fully There were no significant fines in the administrative, judicial and arbitration spheres nor non-monetary sanctions. Product and Service Labeling PR3 Core Type of product and service information required by labeling procedures. Partially PR4 Additional Non-compliance concerning product and service labeling. Fully 100, 101 – PR5 Additional Practices related to client satisfaction, including results of surveys. Fully 100, 103, 105, 106, 107 – – 56 Not available Communication and Marketing PR6 Core Programs for adherence to laws, standards, and voluntary codes. Fully 110 PR7 Additional Incidents of non-compliance with regulations concerning the communication of products and services. Fully There were no incidents of non-compliance concerning regulations and voluntary codes. PR8 Additional Substantiated complaints regarding breaches of client privacy. Fully There are no records of civil inquiries or proceedings under appeal with Procon regarding the breach of privacy or loss of data. Fines for non-compliance concerning the provision of products and services. Fully 110 Compliance PR9 Core 150 Global Reporting Declaração de Garantia Initiative (GRI) Cross Index (assurance statement) Itaú Unibanco 150 152 – Independent Auditors’ Limited Assurance Report GRI Application Level Check 155 157 Global Compact FINANCIAL SECTOR INDICATORS Indicator Description Reported Page/Online PDF Reason for omission FS1 Core Policies with specific environmental and social components applied to business lines. Fully 63, 69, 70, 79, 83, 87 – FS2 Core Procedures for assessing and screening environmental and social risks in business lines. Fully 63, 70, 79, 83, 85 – FS3 Core Processes for monitoring clients’ implementation of and compliance with environmental and social requirements included in agreements or transactions. Fully 63, 70, 79, 83, 87 – FS4 Core Process(es) for improving staff competency to implement the environmental and social policies and procedures as applied to business lines. Fully 50, 61, 70, 73, 79, 81, 87, 97 – FS5 Core Interactions with clients/investees/business partners regarding environmental and social risks and opportunities. Fully 51, 73, 112 – FS6 Core Percentage of the portfolio for business lines by specific region, size (e.g. micro/small/medium/large) and sector. Partially FS7 Core Monetary value of products and services designed to deliver a specific social benefit for each business line broken down by purpose. Fully 62, 68 FS8 Core Monetary value of products and services designed to deliver a specific environmental benefit for each business line broken down by purpose. Fully 126 FS9 Core Coverage and frequency of audits to assess implementation of environmental and social policies and risk assessment procedures. Fully 51 FS10 Core Percentage and number of companies held in the institution’s portfolio with which the reporting organization has interacted on environmental or social issues. FS11 Core FS12 50 Not available – Partially 51, 73, 112 Percentage of assets subject to positive and negative environmental or social screening. Fully 46, 49, 80 Core Voting polic(ies) applied to environmental or social issues for shares over which the reporting organization holds the right to vote on shares or advises on voting. Fully 73 – FS13 Core Access points in low-populated or economically disadvantaged areas by type. Fully 59, 60, 68, 109 – FS14 Core Initiatives to improve access to financial services for disadvantaged people. Fully 110 – FS15 Core Policies for the fair design and sale of financial products and services. Fully 56 – FS16 Core Initiatives to enhance financial literacy by type of beneficiary. Fully 59, 61, 66, 69, 74, 88, 97, 107 – Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report Global Compact Not available 151 Appendices Methodology Assurance Statement Itaú Unibanco The approach of the AA1000AS process consisted of: • An evaluation of the content of the 2010 Annual Sustainability Report; • An understanding of the process of generating information In the period of 2010/2011, BSD Consulting, giving continuity to its for the Annual Sustainability Report, taking into consideration mandate for the independent assurance of the sustainability reporting the engagement process and the definition of content; and stakeholder engagement process, reviewed the preparation of the 2010 Annual Sustainability Report with respect to the current Política de • A review of selected information from print media, websites Sustentabilidade (Sustainability Policy) and Essência de Sustentabilidade and other specialized sources; (Sustainability Essence). The purpose of the assurance process is to provide Itaú Unibanco’s stakeholders with an independent opinion • Interviews with managers and employees from key areas on: the quality of the report; the stakeholder engagement process; the to check the relevance and context of the information for adherence to the principles of AA1000AS (2008); and the continuity of reporting and management, and on the adherence of the the sustainability management processes. bank to its own sustainability commitments; Independence • An analysis of internal documents and minutes that prove We operate independently and we assure that no BSD employee the authenticity of the information presented in the report has any professional consulting relationship or other commercial ties and provide evidence of the decision making process for with Itaú Unibanco. BSD Consulting is licensed by AccountAbility as relevant topics; an assurance provider (AA1000 Assurance Licensed Provider), under • An analysis of the relevance of the information in the Annual Registry No. 000-33. Sustainability Report in view of the corporate guidelines contained Our Responsibility in the Política de Sustentabilidade and Essência de Sustentabilidade. BSD Consulting is a company specialized in sustainability. The work has been conducted by a team of experienced professionals who are Main Conclusions trained in external audit processes. In the view of BSD Consulting, Itaú Unibanco was able to respond to the challenges of sustainability, meeting the Responsibilities of Itaú Unibanco and BSD expectations of its main stakeholders and showing positive The content of the Annual Sustainability Report, the engagement results in many key areas, such as client service. However, processes and the definition of materiality are the responsibility of Itaú the inclusion of more relevant matters in the management Unibanco. The assessment of the report’s content and the checking of process still needs a more solid basis than the Essência de the GRI application levels were not in the scope of BSD Consulting’s work. Sustentabilidade. This document is not yet satisfactorily complying with the principles of inclusion and materiality. We Scope and Limitations present below the summarized conclusions with respect to The scope of our work included the information presented in the the three principles of AA1000AS. printed version of the Itaú Unibanco 2010 Annual Sustainability evaluation process was conducted in compliance with the AA1000 Main Conclusions on the Adherence to the AA1000AS Principles Assurance Standard 2008 following Assurance Type 1, which provides 1. Inclusion – addresses the participation of a moderate level of assurance. The process covered the evaluation stakeholders in the development of a transparent and of the adherence of the process to three main principles: Inclusion, strategic sustainability management process and the Materiality and Responsiveness. scope of this management Report for the period covered by the report. The independent 152 Global Reporting Initiative (GRI) Cross Index 140 Declaração de Garantia (assurance statement) Itaú Unibanco 152 Independent Auditors’ Limited Assurance Report GRI Application Level Check 155 157 We presented the analysis of these Principles in accordance with • Relationships with clients: The mobilization to ensure greater the segments of the bank’s Sustainability Policy. client satisfaction within the Todos pelo Cliente campaign brought positive results and reduced the number of accepted complaints. • Governance and Management: In 2010, Itaú Unibanco The non-account holders of the bank were granted special access consolidated its sustainability committees and commission, to the service channels and have their own shops, created to serve providing support to the activities of the sustainability area at the clients from the credit card segment. the senior management level. However, the bank still faces the challenge of taking the topics discussed at specialized forums to • Relationship with society: The bank’s social investments continue the day-to-day activities of managers and employees, establishing to be applied on relevant areas for Brazilian society, such as the real targets at the operating levels of departments and branches. strengthening of public education. In its report, Itaú Unibanco makes a considerable effort to show the mechanisms of donations to • Ethics and transparency: The understanding of the ethics political campaigns conducted pursuant to clear rules and criteria. and transparency principles by employees reached a high level that may be considered a benchmark in the industry. The • Environment: The year 2010 was characterized by a reform of progress in this segment includes new efforts with respect to the bank buildings of the agency network. This reform has not the availability of information on a transparent basis to clients. yet incorporated the progress that the bank showed preparing The bank responded as transparently as possible to the issue the Tatuapé Administrative Center for the ISO14000 certification regarding donations to political candidates. (expected to be audited in the first half of 2011), and the successful LEED certification for the office at the Eldorado Business Tower. • Products and services: Itaú Unibanco continued to make efforts towards increasing the application of social and environmental • Relationship with stockholders: The relationship with criteria in its main services and products. However, it still needs stockholders is marked by a high level of communication and to apply social and environmental criteria to new products (with transparency. The inclusion of stockholders in the Sustainability no restriction) and adjust sales processes to avoid antagonistic Policy would have a positive effect on the mobilization of new situations in which the need to increase sales conflicts with the investors who seek to align their objectives with sustainable search for sustainable development by the organization. financial institutions. • Internal public: The bank has effective mechanisms of 2. Materiality – addresses relevant issues that influence engagement with the internal public that allow dialogue for stakeholder decisions about the economic, social and and the integration of employees with the organization’s environmental performance of the organization objectives. We verified that the implementation of the SA8000 • In 2010, Itaú Unibanco decided on the maintenance of its certification, mentioned by the Política de Sustentabilidade and sustainability agenda via the Essência de Sustentabilidade started in 2009 within the scope of the Administrative Center, document, which is composed of the following topics: did not continue in 2010. Transparency and governance; Client satisfaction; Social and environmental criteria; Diversity; Climate change; Financial • Relationship with suppliers: The bank includes a risk analysis education; Microfinance; Stakeholder engagement. system in the management of its suppliers. Although it applies social and environmental criteria in the contractual process, it • The topics were addressed within the processes arising has not yet integrated the sustainability topic in its production from the Política de Sustentabilidade or further discussed in chain in an expressive way. The process is not yet well internal seminars and workshops with the broad participation disseminated to the other areas of the bank. The improvement of internal stakeholders. Whereas the Transparency and in communication and dissemination of sustainability in governance, Client satisfaction, Social and environmental the production chain are challenges for the upcoming criteria and Financial education topics were integrated into management and reporting cycles. operations in a more clear manner, the Diversity, Climate Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 153 Appendices change, Microfinance, and Stakeholder engagement topics Medium (B) risk. The analysis proved to be effective, resulting show more conceptual than practical progress. in the improvement of projects (15 in total) and decisions to deny financing (43) in cases for projects that are highly critical • The high number of targets listed by the bank in its report and with respect to social and environmental aspects. the difficulty faced in the practical application of the Essência de Sustentabilidade show that the bank should review its process • In 2010, Itaú Unibanco implemented the GRI indicators with for determining materiality, giving stronger emphasis to the more propriety, aiming to regularly monitor the performance and selection of topics that are truly strategic for the bank at the creating the basis for a more tangible measurement of compliance current time and applying a qualified stakeholder engagement with its sustainability objectives. based on the AA1000-methodology. • Despite the effort of Itaú Unibanco to be inclusive in the 3. Responsiveness – addresses the actions taken by implementation of the indicators, the variation of the limits the organization to respond to specific demands from throughout the report (sometimes referring to foreign stakeholders operations and, sometimes, to domestic operations), does not • The bank positively addressed the topic of improving allow for a comparison of the published indicators. the relationship with its clients, recognizing the need to address failures via the identification of the root cause and In the evaluation of BSD Consulting, in 2010, Itaú Unibanco concentrating efforts on all levels of the bank to improve the was able to multiply actions related to those Essência de satisfaction of this key stakeholder. Sustentabilidade topics that are more connected with its business, such as Client Satisfaction and Social and • Itaú Unibanco started a financial education process with the Environmental Criteria. To ensure the full implementation of internal public that creates value for all employees and their its policy, the bank needs to better integrate matters at the families and will provide a more solid basis for the financial operating level and in the areas that are not directly related to education efforts intended for external stakeholders, which is the Essência de Sustentabilidade topics, as well as to implement a currently implemented for some client segments. more qualified and systematic stakeholder engagement model. • In response to a market demand, the bank develops new products and reformulates existing products with sustainability criteria. However, the innovation must be associated with strong work together with the sales department to increase the sales of such products aligned with sustainability, covering all business areas, such as insurance and vehicle financing. • The implementation of the social and environmental risk São Paulo, April 14, 2010 analysis grew in an organic manner and reached 100% of the projects and clients with financing amounts higher than R$ 5 Beat Grüninger million, which are analyzed and classified to be of High (A) and Partner – BSD Consulting, Brazil 154 Global Reporting Initiative (GRI) Cross Index 140 Declaração de Garantia (assurance statement) Itaú Unibanco Independent Auditors’ Limited Assurance Report 152 155 GRI Application Level Check 157 Independent Auditors’ Limited Assurance Report on the Annual Sustainability Report for 2010 of Itaú Unibanco Holding S.A. To the Board of Directors Itaú Unibanco Holding S.A. Introduction We have been engaged to perform a limited assurance In a limited assurance engagement, the evidence-gathering engagement on the Annual Sustainability Report for 2010 of procedures are more limited than those performed in a Itaú Unibanco Holding S.A., prepared under the responsibility reasonable assurance engagement; therefore, less assurance of the Holding’s management. This responsibility includes is obtained than in a reasonable assurance engagement. designing, implementing and maintaining internal control The procedures selected depend on the practitioner’s over the proper preparation and presentation of the Annual judgment, including the assessment of the risks of material Sustainability Report. Our responsibility is to provide a limited noncompliance by the Sustainability Report with the assurance report on the information disclosed in the Annual criteria described below (Scope and limitations). Within Sustainability Report of Itaú Unibanco Holding S.A. for the year the scope of our work we performed procedures which ended December 31, 2010. included but were not limited to: (i) planning the work, taking into consideration the materiality and the volume of Criteria adopted in preparing the sustainability report information presented in the Annual Sustainability Report The Annual Sustainability Report for 2010 was prepared in controls; (iii) examining, on a test basis, evidence supporting accordance with the guidelines for sustainability reports of the quantitative and qualitative data in the Sustainability Global Reporting Initiative (GRI-G3) for Application Level A+. Report; (iv) interviewing the managers responsible for the Following these guidelines, Itaú Unibanco Holding S.A. has information; and (v) comparing information of a financial reported 79 essential and additional performance indicators nature with the accounting records. These procedures were and 16 performance indicators of the financial sector. deemed sufficient to allow a limited level of assurance and, for 2010; (ii) obtaining an understanding of the internal consequently, do not include all those required for issuing a Procedures Applied broader assurance report, as set forth in said standard. Our limited assurance engagement was performed in accordance with the Brazilian Accounting Standard NBC TO Our limited assurance engagement also included verifying 3000 for assurance engagements other than audit and review, the application of the requirements established in GRI-G3 for issued by the Federal Accounting Council (CFC). This standard Application Level A+ reports. requires that we comply with ethical requirements and plan and perform the assurance engagement to obtain limited assurance that no matter has come to our attention that causes us to believe that the Annual Sustainability Report for 2010 is not in accordance with the criteria described below (Scope and Limitations), in all material respects. Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 155 Appendices Scope and Limitations Additional comments The objective of our work was to verify and evaluate Information on the major challenges faced by the Holding, whether the data included in the Annual Sustainability which are characterized as the “Sustainability Essence”, was Report for 2010, with respect to the obtaining of improved in the Annual Sustainability Report for 2010, by qualitative information and measurement and calculation improving the structuring of the eight suggested topics, which of quantitative information, complies with the criteria show the Holding’s focus on the major challenges and impacts and guidelines for sustainability reports from the on sustainable development. Global Reporting Initiative (GRI-G3). Opinions, historical information, descriptive information and information With respect to the definition of the Contents of the resulting from subjective evaluations are not included in the Sustainability Report in accordance with the principles scope of the work performed. established in GRI-G3, the Annual Sustainability Report for 2010 is more clear and transparent as regards the challenges undertaken Conclusion in 2010 and their related results, and also provides the Holding’s Based on our limited assurance engagement, we are not position with respect to challenges assumed for 2011. aware of any significant modification that should be made to the information included in the Annual Sustainability Report São Paulo, April 14, 2011 for 2010 of Itaú Unibanco Holding S.A. for the year ended December 31, 2010, for this information to be fairly presented, in all material respects, in accordance with the criteria adopted for Application Level A+ reports. PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5 Manuel Luiz da Silva Araújo CRC 1RJ039600/O-7 “S” SP 156 Declaração de Garantia (assurance statement) Global Reporting Itaú Unibanco Initiative (GRI) Cross Index 140 152 Independent Auditors’ Limited Assurance Report GRI Application Level Check 155 157 Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 157 Appendices Publication and general coordination: Public Relations and Recognition Department Itaú Unibanco Superintendency of Corporate Communication Coordination of indicators: Itaú Unibanco Superintendency of Sustainability Coordination of editorial project: Report Comunicação Graphic and editorial design: Report Design Proofing: Assertiva Produções Editoriais Photography: Cia de Foto – 3, 7, 9, 13, 18, 21, 30, 34, 37, 38, 40, 45, 51, 53, 54, 75, 79, 82, 85, 92, 99, 101, 103, 108, 111, 115, 118, 127, 155 Disclosure – 4, 9, 12, 25, 26, 89, 128, 133, 135, 136, 138 Gulherme Colugnatti – 67 Marcelo Soubhia – 39, 127 Printing: Stilgraf Artes Gráficas e Editora Ltda. Print run: 500 Online version: TheMediaGroup Itaú Unibanco Holding S.A. Praça Alfredo Egydio de Souza Aranha, 100 Torre Olavo Setubal – CEP 04344-902 – São Paulo – SP 158 Editorial Team 158 Aiming at minimizing the environmental impact of this publication, it was printed using vegetable oil based paint. Falta selo FSC inglês Itaú Unibanco Holding S.A. 2010 Annual Sustainability Report 159 Praça Alfredo Egydio de Souza Aranha, 100 Torre Olavo Setubal CEP 04344-902 – São Paulo – SP www.itau.com.br