EU Taxonomy

Under the Taxonomy, environmentally sustainable investments must:

• Make a substantial contribution to at least one of the six environmental objectives,
• Do not significantly harm (DNSH) any of the remaining environmental objectives,
• Comply with minimum safeguards.

The criteria for substantial contribution and DNSH have been defined for the following environmental objectives:

• Climate Change Mitigation (CCM),
• Climate Change Adaptation (CCA),
• Sustainable Use and Protection of Water and Marine Resources (WMR),
• Transition to a Circular Economy (CE),
• Pollution Prevention and Control (PPC),
• Protection and Restoration of Biodiversity and Ecosystems (BIO)s.

In accordance with EU Taxonomy and its implementing acts:

• Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of information on environmentally sustainable economic activities to be disclosed by undertakings subject to Article 19a or 29a of Directive 2013/34/EU and defining the methodology for compliance with this disclosure obligation (Regulation 2021/2178), as amended by Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023^[30],
• Commission Delegated Regulation (EU) 2026/73 of 4 July 2025 amending Delegated Regulation (EU) 2021/2178 as regards the simplification of the content and presentation of information to be disclosed concerning environmentally sustainable activities and Delegated Regulations (EU) 2021/2139 and (EU) 2023/2486 as regards simplification of certain technical screening criteria for determining whether economic activities cause no significant harm to environmental objectives,
• Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or adaptation, as well as specifying whether that economic activity does not cause significant harm to any of the other environmental objectives, as amended by Commission Delegated Regulation (EU) 2023/2485 of 27 June 2023^[31],
• Commission Delegated Regulation (EU) 2023/2485 of 27 June 2023 amending Delegated Regulation (EU) 2021/2139 establishing additional technical screening criteria for determining the conditions under which certain economic activities qualify as contributing substantially to climate change mitigation or climate change adaptation and for determining whether those activities cause no significant harm to any of the other environmental objectives,

Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, or to the protection and restoration of biodiversity and ecosystems and for determining whether that economic activity causes no significant harm to any of the other environmental objectives and amending Commission Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities.

[30] Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing technical qualification criteria to determine the conditions under which an economic activity qualifies as making a significant contribution to the sustainable use and conservation of water and marine resources, to the transition towards a closed loop economy, to the prevention and control of pollution, or to the protection and restoration of biodiversity and ecosystems, and determining whether that economic activity does not cause serious harm to any other environmental objective, and amending Commission Delegated Regulation (EU) 2021/2178 as regards the public disclosure of specific information in relation to those economic activities.

[31] Commission Delegated Regulation (EU) 2023/2485 of 27 June 2023 amending Delegated Regulation (EU) 2021/2139 establishing additional technical screening criteria to determine the conditions under which certain economic activities qualify as contributing significantly to climate change mitigation or climate change adaptation, and to determine whether those activities do not cause significant harm to any other environmental objective.

In its 2025 disclosures, the Pekao Group as a capital group with a credit institution as its parent entity, is required to disclose key performance indicators (KPIs) related to compliance with the Taxonomy concerning two climate targets and four environmental targets:

• CCM – climate change mitigation,
• CCA – climate change adaptation,
• WTR – water and marine resources,
• CE – circular economy,
• PPC – pollution prevention and control,
• BIO – biodiversity and ecosystems,

In its 2025 disclosures, the Pekao Group applied the approach referred to in Article 4 of Commission Delegated Regulation (EU) 2026/73 of 4 July 2025, which provides that, in respect of a financial year starting between 1 January and 31 December 2025, it is permissible to apply Delegated Regulations (EU) 2021/2178, (EU) 2021/2139 and (EU) 2023/2486 as in force on 31 December 2025 (the so-called transitional period). At the same time, in the European Commission’s draft FAQ^[32] dated 17 December 2025, in questions Nos. 1 and 3 the Commission clarifies the rules under which financial institutions may make use of the transitional period, including disclosure of Template 6 (KPI on fees and commissions income from services other than lending and asset management) and Template 7 (KPI on the Trading book). Accordingly, in the present disclosure the Bank refrained from publishing the above templates in line with the Commission’s explanations set out in its response to FAQ question No. 3.

[32] Draft Commission Notice on the interpretation and implementation of certain legal provisions of the Disclosures Delegated Act under Article 8 of the EU Taxonomy Regulation, as amended by the Omnibus Delegated Act, on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets (fourth notice).

The Green Asset Ratio (GAR) represents the proportion of assets associated with Taxonomy-aligned economic activities in relation to total covered assets. In accordance with Delegated Regulation 2021/2178, the numerator of the Green Asset Ratio includes::

• Exposures in the form of loans/advances, debt instruments or equity instruments to financial undertakings subject to non-financial reporting obligations under the Corporate Sustainability Reporting Directive,
• Exposures in the form of loans/advances, debt instruments or equity instruments to non-financial undertakings subject to non-financial reporting obligations under the Corporate Sustainability Reporting Directive
• Exposures to households, including:
  • loans collateralised by residential immovable property,
  • loans for building renovation,
  • motor vehicle loans,
• local governments financing.

In accordance with Delegated Regulation 2021/2178, the following categories of assets are excluded from the numerator and included in the denominator of the Green Asset Ratio:

• Exposures to non-financial undertakings not subject to CSRD (including SMEs) – all entities to which the Group provides financing / whose instruments it holds, which are not subject to the CSRD and carry out non-financial activities,
• Exposures to non-financial undertakings not subject to the CSRD, outside the EU,
• The gross carrying amount of:
  • derivatives,
  • on demand interbank loans,
• Cash and cash-related assets,
• Other assets (goodwill, commodities, etc.).

The following categories of assets are not included in the calculation of the Green Asset Ratio (i.e., in either the numerator or denominator of the ratio):

• Exposures to central governments and supranational issuers,
• Exposures to central banks,
• Trading portfolio.

Pursuant to Delegated Regulation 2021/2178, financial undertakings use the latest available data and KPIs of their counterparties to calculate their own KPIs. To comply this requirement, the Group, based on the 2024 non-financial reports of customers that are financial undertakings and non-financial undertakings, verified whether those counterparties had made changes to their calculations since the last reporting period and whether they had presented comparative data.

Key performance indicators for off-balance-sheet items are supplementary indicators that show the extent to which the Pekao Group’s off-balance-sheet items, such as:

• Financial guarantees securing loans and advances and debt securities to undertakings subject to the CSRD Directive,
• Assets under management (equity and debt instruments) of undertakings subject to the CSRD Directive.

Green Asset Ratio for Financial Guarantees represents the proportion of financial guarantees supporting loans and advances and debt securities financing Taxonomy-aligned economic activities, in relation to  all financial guarantees supporting loans and advances and debt securities for undertakings.

Green Asset Ratio for Assets Under Management presents the proportion of assets under management (equity instruments, debt instruments) from undertakings financing Taxonomy-aligned economic activities, in relation to total assets under management (equity instruments, debt instruments and other assets).

The identification of entities subject to CSRD is based on internal data resources, combined with information available on the BIK ESG Platform and the Instrat Foundation’s CSRD companies list. For entities operating outside Poland, an expert review of the portfolio is performed.

At the same time, in light of the amendments introduced by the so‑called Omnibus I package to the Accounting Directive (2013/34/EU), which narrow the scope of entities subject to mandatory sustainability reporting requirements, the Pekao Group has applied in its current reporting the definition of large undertakings that was in force prior to the entry into effect of Omnibus I. Under this definition, large undertakings are those which, as at the balance‑sheet date, exceed at least two of the following three criteria: an average number of employees of 250; a balance‑sheet total of EUR 25 million; net turnover of EUR 50 million in the financial year.

We also determined the gross carrying amount of exposures in the form of loans and advances, debt securities and equity instruments in the banking book separately for each identified entity as of 31 December 2025.

For general-purpose financing, the Group determined the gross carrying amount of Taxonomy-eligible and Taxonomy-aligned exposures for customers subject to CSRD based on the key performance indicators published by these customers in their Taxonomy disclosures for 2024. The Group did not assess exposures to undertakings which, individually, were not subject to CSRD but are subsidiaries of a parent undertaking subject to those provisions.

For exposures to a subsidiary of a parent undertaking subject to CSRD, but exempt from sustainability reporting at individual level, we applied the key performance indicator for that undertaking as disclosed by its parent undertaking.

Due to limited access to data and documents evidencing Taxonomy alignment, the Pekao Group did not assessed any financings with a specific use of proceeds as Taxonomy-aligned, disclosing them only as Taxonomy-eligible exposures. Where sufficient data was unavailable to reliably assess compliance with the technical screening criteria, the Group only assessed the Taxonomy eligibility of the exposure.

Regarding the assessment of compliance with Minimum Safeguards, the  Group based its assessment on information disclosed by customers in their Taxonomy disclosures.

The Group is working on implementing appropriate changes in credit processes so that, in subsequent reporting periods, the relevant data can be obtained to assess Taxonomy eligibility and alignment at the financing origination stage.

The Group’s disclosures relating to retail clients cover residential real estate loans (collateralised by residential real estate) and do not include exposures related to the purchase of products and services, such as electric vehicles or photovoltaic panels. Consequently, the Pekao Group has not collected documentation confirming that undertakings producing goods and providing services purchased by retail clients comply with the relevant technical screening criteria and minimum safeguards.

To assess compliance with the substantial contribution criteria for residential buildings constructed before 31 December 2020, the Group assessed whether the building serving as collateral belongs to the top 15% most energy-efficient buildings in the country or region in terms of primary energy demand (PED), i.e. whether, in line with communication of the Ministry of Development and Technology, the building has a primary energy demand lower than the values specified in Table 1^[33] of that communication. As a source of information on the primary energy demand of buildings serving as collateral for mortgage loans, we used data from energy performance certificates and data contained in the Central Register of Building Energy Performance maintained by the Minister of Development and Technology.

[33] Reference to the Ministry of Development and Technology’s announcement: Table 1 Energy demand values corresponding to the 15% most energy-efficient buildings.

To assess compliance with the substantial contribution criteria for buildings constructed after 31 December 2020, the Group assessed whether the building serving as collateral has a primary energy demand at least 10% lower than the threshold specified for nearly zero-energy buildings, i.e. the requirements laid down in the Regulation of the Minister of Infrastructure of 12 April 2002 on building technical requirements and their locations. The Regulation sets maximum levels of primary energy demand for nearly zero-energy buildings separately for multi-family and single-family buildings. Exposures for which the Group did not have energy demand data were disclosed as Taxonomy-eligible but not Taxonomy-aligned.

For properties that, as a result of the above assessment process, were classified as meeting the substantial contribution criteria, the Pekao Group analysed compliance with the DNSH criteria by analysing the exposure of the property to physical risks (including flood and landslide risks) and the materiality of that risk in accordance with internal methodology. In the assessment, we took into account, among other factors, the property address, year of construction, the floor of the unit and the building type. The Group considered buildings to meet the DNSH criteria where the analysis indicated no exposure to physical risks, or where exposure to physical risks was assessed as not high in accordance with the adopted methodology. As of 31 December 2025, we did not identify, in the Group’s loan portfolio, financing granted to households for building renovation or the purchase of motor vehicles.

To support key performance indicator disclosures, the Group conducted a review of its exposure to local governments, identifying financings with a defined use of proceeds that contributes to the Green Asset Ratio.

Based on the purpose of financing, the Group identified Taxonomy-eligible loans for local governments and conducted an additional Taxonomy alignment assessment. This assessment considered compliance with substantial contribution criteria, and Do No Significant Harm (DNSH) criteria.

For the assessment of the substantial contribution and DNSH criteria, we developed internal instructions for assessing compliance with the technical screening criteria for activities that most commonly constitute the subject of financing granted to local governments. Due to limited access to data and documents enabling confirmation of alignment with the EU Taxonomy, the Group did not classify these financings as Taxonomy-aligned , disclosing them only as Taxonomy-eligible exposures.

The Group is continuing its efforts to enhance credit processes, which will enable the collection of comprehensive data at the financing approval stage to better assess Taxonomy eligibility and alignment in the future.

As of 31 December 2025, the Group did not identify any financing in its credit portfolio related to public housing projects for local government entities.

Among non-financial undertakings subject to the CSRD Directive that are customers of the Bank and Group entities, the highest Taxonomy alignment indicators are reported by undertakings operating in sectors related to the generation, distribution and trading of electricity, as well as fuel production, transport and the manufacture of machinery for the extractive industry.

The sustainable activities reported by non-financial undertakings identified in the Group’s portfolio primarily contributed to the CCM (Climate Change Mitigation) objective.

Compared with the information disclosed by the Group for 2024, the value of the Green Asset Ratio increased both in relation to turnover (an increase of 0.81 p.p. year-on-year) and in relation to capital expenditure (an increase of 0.53 p.p. year-on-year).

These changes are driven mainly by a significant increase in the value of environmentally sustainable (Taxonomy-aligned) exposures in the portfolio of mortgage loans for housing purposes granted to households, with a broadly comparable year-on-year value of total covered assets (included in the denominator of that ratio).

A material factor influencing the value of Taxonomy‑aligned household exposures was the change in the distribution of primary energy demand of buildings in the country and, consequently, the change in the primary energy demand threshold corresponding to the 15% most energy‑efficient buildings. This threshold, set out in the communication of the Ministry of Development and Technology, increased in 2025 compared with the previous year.

With respect to general‑purpose financing for non‑financial corporations, the gross carrying amount of Taxonomy‑aligned exposures decreased compared with the previous reporting period due to changes in the portfolio structure and client base. The Group did not introduce any changes to the methodology applied for assessing Taxonomy alignment, nor to the data sources used, which—similarly to the previous year—were the Taxonomy disclosures of the Group’s clients.

In 2025, the Bank presented its business strategy for 2025–2027, of which ESG forms an integral part. Environmental, social and governance (ESG) aspects remain an important pillar of the Bank’s strategy. In line with the targets set, the Bank will focus on supporting clients in their transformation and in meeting environmental, social and governance requirements – at a pace that reflects their actual operational, financial and sector-specific capabilities.

In the environmental area, the Bank supports the objectives of the energy and climate transition, while aligning the pace and scale of actions with market conditions.

Our ambition is to provide new financing for green projects in the amount of PLN 9 billion. We define green projects as financing for: renewable energy sources, low-emission transport, energy-efficient construction, energy efficiency, the circular economy, biodiversity, prevention pollution, and the protection of water resources. These activities contribute to achieving all six environmental objectives covered by the EU Taxonomy, i.e.: climate change mitigation, climate change adaptation, water and marine resources, pollution prevention and control, biodiversity and ecosystems.

Compliance with the Taxonomy’s technical screening criteria is one of the assumptions underpinning the main decarbonisation levers on the Bank’s side, as set out in the Transition Plan for residential real estate loans.

For both the primary and secondary markets, a gradual increase in mortgage loans aligned with the Taxonomy’s technical screening criteria is assumed. The share of exposures contributing to the achievement of the Transition Plan’s targets for mortgage loans will be monitored and reported to the Bank’s Management Board and to the ESG Council.

At the same time, we continue to work on developing a product offering that supports the sustainable development of our clients and is tailored to the expectations of individual business segments. These efforts are complemented by educational and informational initiatives on climate and the environment, discussed in more detail in chapter [E1-3].