In its day-to-day operations, Bank Pekao has a special commitment to environmental protection issues. The assessment of the ESG risks is one of the integral elements of the assessment of credit transactions made with business entities. Its aim is to promote informed credit decision-making and appropriate relationship management with customers who operate in areas that significantly affect the environment. Wherever possible, negative environmental, social and climate impacts should be avoided. If avoidance is not possible, negative impacts should be reduced, mitigated or compensated accordingly.
Climate and environment
ESG risks in the credit business
Bank Pekao supports environmentally-friendly projects and takes into consideration ESG issues in the process of analyzing credit risk connected with transactions being executed and in the process of monitoring those transactions.
The Bank, together with the assessment of creditworthiness and credit risk in the strict sense, carefully assesses the specific risk of transactions, in particular legal, reputation, political, environmental risks, the risk of customer’s failure to comply with the principles of corporate social responsibility, money laundering and terrorist financing (e.g. by identifying the customer and verifying his identity, establishing the ownership and control structure and identifying and verifying the identity of the beneficial owner, establishing the purpose and nature of the business relationship) conflict of interest risk. In the ESG risk assessment, the Bank takes into account climate, environmental, social and corporate governance risks. It takes particular care of the risks arising, i.a., from the transition to an economy that is low-carbon and “resilient” to climate change, and threats arising from the so-called risks of physical climate change.
Should environmental hazards connected with the type of business activities carried out by borrowers occur, the Bank cooperates with customers in order to mitigate potential consequences of environmental risks. The purpose of such cooperation is to identify, assess and mitigate environmental, social, and climate risk and takes place during the assessment of credit risk and is based on methodologies and relevant trade guidelines of the European Bank for Reconstruction and Development and the European Banking Authority (hereinafter: EBA).
If the customer is found incapable of mitigating the ESG risks, the Bank defines conditions for particular environmental actions during the transaction and may activate environmental clauses in the credit facility agreement, among other possible solutions.
The Bank aims to change the balance sheet structure of its loan portfolio by gradually reducing its financial exposure to carbon-intensive activities, while increasing its commitment to financing green or sustainable projects. The Bank recognizes as socially desirable infrastructure investments that have low CO2 emissions and are resilient to climate change and disasters, and supports the transformation of the Polish energy sector by, among other things, financing projects aimed at improving energy efficiency, changing the energy mix (implementing low-carbon and energy-efficient solutions) and adapting to growing environmental requirements.
- new coal and lignite mining projects, and new energy projects based on coal and lignite, excluding projects supporting the transformation of the Polish energy sector,
- activities generating a material threat to the natural environment and social issues.
The customer is evaluated for compliance with corporate social responsibility, taking into account such negative aspects of its operations as corruption, failure to comply with health and safety regulations, exploitative forced labor, employment of minors in violation of the law, discriminatory practices, exploitation of scarce natural resources, testing of products on animals and cruelty to animals, unethical actions toward contractors or competitors, legitimate local protests related to the customer’s operations, manufacture of products or offering of services harmful to consumers.
In terms of protecting specific groups of stakeholders, contractors and customers, the Bank has and applies the Rules for the sale of credit and payment products to consumers at Bank Polska Kasa Opieki Spółka Akcyjna and Policy for the sale of investment products. The Bank also adheres to the highest standards in handling confidential information within the meaning of the Regulation of the European Parliament and of the Council of April 16, 2014 on Market Abuse.