Climate risk

Since 2019 the Bank has been calculating the level of greenhouse gas emissions from operating activities (for the Bank and for the Group). In 2021, it adopted ambitious short-term objectives concerning reduction in the Bank’s (Scopes 1 and 2) GHG emissions aligned with the objectives of the Paris Agreement. The Bank is focused on improving the measurement of GHG emissions generated by the Bank in all scopes. In addition, the Bank eliminates carbon-intensive energy sources (in 2021, it liquidated the last coal-fired boiler room on the premises used by the Bank) and takes measures to reduce energy consumption (e.g. photovoltaic installations in selected properties of the Bank).

The Bank is aware of the impact of its product portfolio on climate and the impact of the risk of climate change on its product portfolio. The Bank has adopted lending policies for the carbon-intensive sector, RES as well as the chemical, oil and gas industries. The aim of the policy for the carbon-intensive sector is to successively reduce the exposure to Customers and transactions based on coal as an energy carrier (consistency with the European climate policy and moving towards zero-carbon emissions in 2050) and to refrain from financing new energy production sources based on coal and lignite. On the other hand, the RES policy assumes increasing the financing of operations related to renewable energy in a successive manner.

In the lending process for institutional Customers rated using the rating methodology, each time the Bank assesses the impact of environmental, social and governance-related factors (the so-called ESG factors) on a Customer’s creditworthiness. The Bank also examines the impact of lending transactions on ESG issues and classifies them into four categories, starting from transactions with a positive effect on ESG issues through to those with a significantly negative impact. In assessing the ESG factors, the Bank takes into account, among others, the risk of climate change and the impact on a Customer’s activities, the Customer’s possible effect on climate change, factors related to human capital or those relating to health and security as well as factors related to the aspects of management (including the organization’s culture and internal supervision).

The Bank has begun work which is aimed at assessing its corporate portfolio according to the Taxonomy for sustainable activities.

In 2021, the Bank conducted a comprehensive gap analysis in relation to selected regulations and guidelines in the area of ESG risk management. The results of the analysis were used to prepare an operational plan for integrating ESG risk with the Bank’s risk management system. The plan is divided into tasks which will be implemented successively and will be reflected in disclosures under the TCFD (Task Force on Climate-related Financial Disclosures) recommendations.

In 2021, the Bank incorporated the management of ESG risks in the risk management strategy of the Bank and the Bank’s Group. It made a disclosure in CDP Disclosure Insight Action for the second time, using TCFD recommendations and, as one of five Polish banks, it received a grade for disclosures in the climate change area (“D”).

It presented the manner in which climate issues are managed at the Bank, emission ratios, objectives and a preliminary assessment of the risks and opportunities which result from climate change. The following risks were distinguished:

• regulatory risk associated with the prices of emission rights and the extension of the ETS system to other sectors;
• regulatory risk associated with the extension of the scope of reported emissions and making the reporting of greenhouse gas emissions obligatory rather than voluntary across the supply and value chain;

• the risk associated with the financing of investment projects on new environmentally-friendly technologies which may not succeed on the market;
• the risk of an increase in the frequency and severity of unusual weather phenomena.

The opportunities identified by the Bank include new possibilities for financing low emission products and services and the financing of energy transition. It expands its green product offer in a systematic manner.