Information Provided to Administrative, Management, and Supervisory Bodies and Their Engagement in Sustainability Matters [GOV-2]

In 2024, we conducted our first double materiality assessment, enabling us to identify key impacts, risks, and opportunities arising from our business activities. This analysis expanded our perspective on these areas, considering both impacts and risks as well as potential opportunities that may drive our further development.

​​​As we have identified new areas of impact and opportunity, we are currently working ​on​​​ developing management mechanisms, systematic monitoring of results, and evaluating the effectiveness of policies, actions, indicators, and sustainability goals. This will allow us to effectively implement and oversee initiatives supporting the realisation of identified impacts and opportunities in the future.

In 2024, the Board did not receive regular reports on matters related to significant impacts, risks, and opportunities (IRO). Nevertheless, selected elements of IRO, such as:

• Organizing financing for new sustainable projects,
• Supporting the energy transition of our clients and the shift to a low-emission economy,
• Implementing various actions aimed at achieving climate neutrality,
• Fostering employee development with respect for diversity and creating an attractive workplace, which will remain the foundation of our actions,
• Reducing the gender pay gap,
• Raising societal awareness and environmental consciousness,
• Developing the Bank while maintaining high standards of corporate governance and ethical business practices,
  were monitored by the Board as part of the Bank’s Strategy.

Regarding risk management, in line with internal regulations and established reporting processes, the following information is reported to the Bank’s Management Board on a quarterly basis:

• Utilisation of the strategic limit for ESG risk at the Bank and Group level;
• Progress on Bank’s​​​​ ESG Strategy KPIs.

In accordance with internal regulations and reporting procedures, the ESG Council is informed quarterly on the following matters:

• Key ESG risk indicators at the Bank level;
• Accuracy of asset classification for selected Bank’s ESG Strategy KPI calculations;
• Progress on Bank’s ESG Strategy objectives, initiatives, and KPIs;
• Monitoring of compliance with regulatory requirements.

The impact of climate change mitigation and adaptation has been analysed by the ESG Council in terms of risk factors and market opportunities for the Bank.

In 2024, key risk-related topics addressed by the Council included:

• Monitoring results of strategic ESG risk indicators within the Bank’s ESG risk management​ ​​​system, particularly regarding transition risk associated with Scope 3, Category 15 greenhouse gas emissions (Investments);
• Evaluation of ESG Strategy KPI achievements.

Additionally, the ESG Council assessed strategic directions and the potential for realising opportunities in selected areas of sustainable development, including:

• Development of products and services supporting customers in their sustainability transformation;
• Building the Bank’s reputation as a responsible institution supporting customers’ transition;
• Establishing cooperation with development banks and investors;
• Collaborating with industry organisations engaged in sustainability;
• Managing the Bank’s internal processes effectively.

The Supervisory Board reviews the Financial Statements of the Capital Group, including the Management Report, which incorporates the Sustainability Statement. It appoints the Audit Committee, the Nominations and Remuneration Committee, and the Risk Committee, all of which monitor specific areas of the Bank’s activities.

The objective of the Audit Committee of the Supervisory Board is to support the Supervisory Board in fulfilling its responsibilities concerning sustainable development by:

• Monitoring the financial reporting process and sustainable development reporting, ensuring compliance with applicable laws and internal regulations governing the Bank’s operations;
• Monitoring the effectiveness of internal control systems as well as risk management and internal audit systems, including in the field of financial reporting;
• Supervising the financial audit process, including the review and assurance of sustainability reports conducted by the audit firm, taking into account any findings and recommendations issued by the Agency following inspections at the audit firm;
• Overseeing and monitoring the independence of the statutory auditor and the audit firm, particularly when the audit firm provides non-audit services to the public interest entity, beyond the statutory audit and assurance of sustainability reporting;
• Informing the Supervisory Board of the results of the audit or assurance of sustainability reporting and explaining how the process contributed to the reliability of financial reporting, sustainability reporting, or the consolidated sustainability reporting of the public interest entity, as well as clarifying the Audit Committee’s role in the review and assurance process;
• Performing other tasks as required by law.

The Nomination and Remuneration Committee of the Supervisory Board assists the Supervisory Board by:

• Submitting proposals regarding the terms of agreements governing the employment or other legal relationships between Management Board members and the Bank, including remuneration of the Management Board members, as well as approving the policy for variable remuneration components for senior executives in the Bank in line with separate regulations;
• Presenting proposals to the General Meeting concerning the remuneration of the Supervisory Board members;
• Preparing recommendations on meeting suitability requirements for the appointment of the Bank’s Management Board and Supervisory Board members in accordance with applicable regulations;
• Compiling reports for the General Meeting on the evaluation of the remuneration policy’s effectiveness within the Bank.

The Risk Committee is responsible, in particular, for:

• Evaluating the Bank’s overall current and future risk appetite.
• Assessing the risk management strategy developed by the Management Board, including policies related to credit, financial, and operational risks.
• Supporting the Supervisory Board in overseeing the implementation of the Bank’s risk management strategy by senior management and verifying whether the pricing of liabilities and assets offered to customers appropriately reflects the Bank’s business strategy and risk exposure. In cases where pricing does not adequately reflect the risk profile, recommending adjustments to the Management Board to ensure alignment with risk types and exposure;
• Presenting the Management Board of the Bank with proposals aiming to ensure that the prices of assets and liabilities are adequate to these risks.

The Management Board member responsible for risk management, as well as other individuals accountable for risk management at the Bank, may communicate directly with the Risk Committee or its individual​ ​members to discuss key issues, including potential inconsistencies with the Bank’s management strategy, risk management strategy, approved risk appetite, and other policies adopted by the Management Board.