Resilience analysis of Pekao Group’s Strategy and business model [SBM-3]

Changes in the regulatory environment related to sustainability, implementation of supervisory institution recommendations, observation of market practices, as well as growing stakeholder expectations (including those of investors and clients) require us to systematically increase engagement in ESG matters, including, inter alia, adapting internal procedures and incorporating ESG matters into product, credit and investment processes. Hence our decision to include these matters as an integral part of the Pekao Group’s development activities in the Strategy published in 2025.

It was equally important for us to incorporate in the document the voices of our stakeholders, whose opinions we considered as guidance in defining strategic objectives for the coming years. In this way, with the involvement of many Bank units, including the Management Board, the final shape of the Strategy was approved by the Supervisory Board.

Material impacts, risks and opportunities and their interrelationships with the strategy and the business model

The double materiality assessment (DMA) carried out in the previous reporting year provided material information that enabled us to better understand the impact of the Pekao Group’s activities on the environment and society, as well as to assess how these factors translate into business opportunities and potential financial risk. Building on the results of this analysis, we were able to define development directions more accurately and determine the shape of policies and actions intended to ensure sustainable growth, financial resilience and the Group’s responsible operation in a changing market and regulatory environment. We assumed that the Strategy is to respond to environmental and social challenges and, at the same time, enable full utilisation of emerging development opportunities. Detailed information on priorities and the approach in the new strategic perspective is provided in SBM-1.

We understand the interests and opinions of key stakeholders through the process of identifying and analysing their expectations as part of the materiality assessment and due diligence. We use the information obtained in these processes to incorporate stakeholders’ perspectives into our strategy and business model, in particular regarding sustainability-related impacts.

We inform the Bank’s administrative, management and supervisory bodies about the opinions and interests of key stakeholders in relation to our sustainability-related impacts. We provide this information as part of the adopted reporting and internal communication processes, enabling stakeholders’ perspectives to be taken into account in strategic decision-making and ensuring effective oversight of the achievement of ESG objectives.

As part of the impact assessment, we considered a breakdown into:

  • type of impact (positive/negative),
  • place where the impact occurs (value chain (mainly through the loan portfolio) / organisation),
  • timing of the impact: actual (currently occurring) / potential (may occur in the future), and across three-time horizons covering the following periods:
    • short (1 year),
    • medium (from 1 to 5 years),
    • long (over 5 years).

We carried out the financial materiality analysis in relation to opportunities and risks for the business model, value chain, strategy and decision-making process across:

  • three-time horizons covering the following periods:
    • short (1 year),
    • medium (from 1 to 5 years),
    • long (over 5 years, in particular at least 10 years for the analysis of the materiality of risks – in accordance with the EBA Guidelines on ESG risk management),
  • with a breakdown by the place where the impact occurs (value chain (mainly through the loan portfolio) / organisation).

The table below presents the most important impacts, risks and opportunities that we identified as part of the update of the double materiality assessment in 2025.

SUB-TOPIC SUB-SUB-TOPIC IMPACT MATERIALITY FINANCIAL MATERIALITY
TYPE AND DESCRIPTION LOCATION OF IMPACT IMPACT HORIZON TYPE AND DESCRIPTION LOCATION HORIZON
ESRS E1: CLIMATE CHANGE
Climate change mitigation N/A Positive, actual: financing of low-emission investments

In the Strategy, we set objectives supporting sustainable transformation: financing green projects in the amount of PLN 9 bn and developing products and a model of cooperation with clients.
We finance investments in renewable energy sources, projects improving energy efficiency and innovative technologies that contribute to reducing greenhouse gas emissions, supporting the transition to a low-emission economy.
As part of general financing, we have a portfolio of financial assets assessed in terms of EU Taxonomy KPI reported by the Pekao Group’s clients. Environmentally sustainable assets due to the CCM objective (climate change mitigation) constitute most of the GAR numerator compared to the other six environmental objectives.

Impact linked to the Strategy

 Downstream Short Medium Lon Opportunity

We see the opportunity to increase revenues related to offering financial products supporting the reduction of GHG emissions and accelerating the transition of the Bank’s clients to a low-carbon economy. We build client awareness of such products and a positive image of the Group as an organisation supporting low-emission solutions.

 Downstream Short Medium Long
Climate change mitigation N/A Negative, actual: financing of activities generating GHG emissions, including high-emission investments

The foundation of our business model is financing clients’ business activities, commercial and residential real estate and vehicles, which involves financing GHG emissions resulting from these activities/objects.

Impact linked to the Strategy

 

 Downstream Short Medium Long Risk

In the ESG risk materiality analysis carried out in 2025, the Bank identified, inter alia, as material transition (transformational) risk related to climate in the credit risk of the portfolio – relating to a potential decrease in the debt servicing capacity of high-emission entities as a result of increased regulatory costs and demand shifts towards a low-emission economy. Potential concentration of exposures in such sectors increases concentration risk and the simultaneous materialisation of credit losses. This is because it is a risk closely linked to financed exposures, which in turn may be particularly exposed to the process of adjusting the economy to regulatory objectives related to ESG risk, and in particular to EU climate policy.

 Downstream Long
ESRS S1: OWN WORKFORCE
Working conditions Secure employment conditions for employees Positive, actual: employment stability due to the use of employment contracts – mostly open-ended contracts

We exert a positive impact on employment security – most employees are employed under an employment contract. At the same time, we respond to market needs and changing expectations, also in terms of employment flexibility; therefore, we enable the conclusion of various types of contracts, including fixed-term and open-ended employment contracts, civil law contracts (contract for specific work and contract of mandate), as well as consultants under body leasing. The turnover rate was 10.52%. The average length of service was 15 years in 2025, which demonstrates long-term and stable employee relationships as regards remaining in an employment relationship with the Bank.

Impact linked to the Strategy

 Organisation Short Medium Long No material opportunities or risks identified. N/A N/A
Working conditions Secure employment conditions for employees Negative, potential: uncertainty as to employment stability due to the development of AI systems within the organisation

Among the Pekao Group’s objectives set out in the Strategy 2025–2027, the development of the use of AI systems has been included, which may generate employee concerns about the stability of their employment (e.g. due to a lack of competencies to operate AI systems or the transfer of tasks performed to an AI system). Over the longer term, this may also result in an actual adverse impact in the form of employment reorganisation within the Pekao Group. In 2025, there were no collective redundancies related to AI.

Impact linked to the Strategy

 Organisation Short Medium Long No material opportunities or risks identified. N/A N/A
Working conditions Adequate pay for employees Positive, actual: competitive and fair remuneration principles

The remuneration policies we have implemented are intended to ensure fair and competitive remuneration and equal pay for work of the same quality regardless of an employee’s individual characteristics. We continuously monitor market benchmarks for remuneration in the banking sector and ensure competitive remuneration conditions in the market.

Impact linked to the Strategy

 Organisation Short Medium Long No material opportunities or risks identified. N/A N/A
Working conditions Working time of employees
Work-life balance of employees		 Positive, actual: compliance with the “right to be offline” and the use of flexible forms of employment in terms of working hours

We enable our employees to use flexible working hours, hybrid work and remote work.

Impact linked to the Strategy

 Organisation Short Medium Long No material opportunities or risks identified. N/A N/A
Working conditions Social dialogue

Freedom of association, existence of works councils and employees’ rights to information, consultation and participation

Collective bargaining, including the percentage of employees covered by collective agreements

 Positive, actual: promoting internal communication and taking employees’ voices into account

Trade unions operate in the Bank. As part of various forms of dialogue with employees, we provide our employees with the opportunity to express their views on matters that are important to them, inter alia, through the job satisfaction survey and through the possibility of submitting projects or suggestions. The Bank, as far as possible, implements selected suggestions and remarks from surveys.

Impact linked to the Strategy

 Organisation Short Medium Long No material opportunities or risks identified. N/A N/A
Working conditions Occupational health and safety (OHS) Positive, actual: ensuring ergonomic workplaces and caring for employees’ mental health

We provide our employees with ergonomic workplaces; we organise training on mental health and reduction of occupational stress, which helps to reduce burnout.

Impact linked to the Strategy

 Organisation Short Medium Long No material opportunities or risks identified. N/A N/A
Equal treatment Gender equality and equal pay for work of equal value Positive, actual: creating a friendly working environment and preventing discrimination

We create a working environment that is friendly to people from communities vulnerable to discrimination (e.g. due to age, gender, disability, sexual orientation, religion, political beliefs, etc.).

Impact linked to the Strategy

 Organisation Short Medium Long No material opportunities or risks identified. N/A N/A
Equal treatment Gender equality and equal pay for work of equal value Negative, actual: existence of a gender pay gap between women and men

A gender pay gap exists in the Pekao Group between women and men.

Impact linked to the Strategy

 Organisation Short Medium Long No material opportunities or risks identified. N/A N/A
Equal treatment Training and skills development for employees Positive, actual: ensuring adequate access to training and encouraging employees to expand competencies

We deliver educational programmes that include local training and general development webinars, as well as international training and programmes, mentoring, internal and external coaching, and certification training such as CFA/ACCA/CIA.

Impact linked to the Strategy

 Organisation Short Medium Long No material opportunities or risks identified. N/A N/A
Equal treatment Measures to prevent violence and harassment in the workplace

Diversity in the workplace

 Positive, actual: training and reporting channels to counter violence and harassment

We have grievance mechanisms for employee matters, including violence and harassment in the workplace. We provide channels for reporting unethical actions, including violence and harassment. We actively train our staff in recognising workplace bullying, discrimination and undesirable behaviours, and in responding to all forms of these phenomena.

Impact linked to the Strategy

 Organisation Short Medium Long No material opportunities or risks identified. N/A N/A
ESRS S4: CONSUMERS AND END-USERS
Information-related impacts on consumers or end-users Privacy Positive, actual: proactive management of the security of customer data

We ensure the security of our clients’ data and funds by implementing personal data protection training and monitoring its effectiveness. We invest in the latest cybersecurity technologies and the development of data security expert competencies, which improves data protection and translates into increased customer trust.

Impact linked to the Strategy

 Organisation, Downstream Short Medium Long No material opportunities or risks identified. N/A N/A
Information-related impacts on consumers or end-users Privacy Negative, potential: harm to consumers and end-users due to significant/critical incidents of data leakage, theft or loss

We assume the possibility of potential large-scale data leaks, theft or loss – i.e. relating to a certain pool of clients, for example in the event of a hacking attack or a failure of banking systems.

Impact linked to the Strateg

 Organizacja, Downstream Short Medium Long No material opportunities or risks identified. N/A N/A
Information-related impacts on consumers or end-users Privacy Positive, actual: proactive efforts to increase customer awareness and knowledge of cybersecurity

We conduct educational activities addressed to all our clients in the cyber security area, including, inter alia, by organising workshops and publishing reports related to security and privacy in the online environment.

Impact linked to the Strategy

 Organizacja, Downstream Short Medium Long No material opportunities or risks identified. N/A N/A
Social inclusion of consumers or end-users Responsible marketing practices Positive, actual: proactive communication in customer service in an understandable, reliable and transparent manner

We enhance the quality and transparency of customer communications by implementing plain language principles in all types of materials offered to clients. By analysing and implementing best market practices, we ensure high transparency of actions. In addition, we obtain customer feedback on communication, which supports its continuous improvement and the building of trust.

Impact linked to the Strategy

 Organizacja, Downstream Short Medium Long No material opportunities or risks identified. N/A N/A
Information-related impacts on consumers or end-users Access to information (of high-quality) Negative, potential: practices misleading customers, misselling

We assume the possibility of potential occurrences of misselling, misleading customers or communication that is unclear to customers due to excessively complex or unclear marketing and advertising messages, which may lead customers to make incorrect financial decisions.

At the time of preparing the Sustainability Statement, no fine has been imposed on the Pekao Group in connection with the use of practices misleading consumers.

Impact linked to the Strategy

 Organizacja, Downstream Short Medium Long Risk

We identified the risk of loss of credibility and customer trust resulting from the lack of access to full and high-quality information about their products and services (reputational risk). In addition, there is a risk of administrative fines and court proceedings in the event of breaches of consumer protection regulations (compliance risk).

We indicate an increased risk related to the imposition by the Office of Competition and Consumer Protection (UOKiK) of fines as a result of practices applied by Bank Pekao S.A., including those related to sanctions of free credit and unauthorised transactions. Due to increasing customer activity, as well as consumer protection by the regulator, which is initiating further proceedings against the Bank, the likelihood of its materialisation in 2025 was identified.

 Downstream Short Medium Long
Social inclusion of consumers or end-users Non-discrimination Access to products and services Positive, actual: ensuring access to financial services for clients from various social groups

The Bank systematically improves customer service processes and the development of remote and mobile channels, with particular emphasis on their ergonomics and accessibility. “Accessibility”, as one of the three pillars of the Strategy, means designing the customer experience in a friendly, intuitive way and focused on the quality of contact with the Bank. Under the “Growth” pillar, the Bank adjusts its offering and service model to changing customer needs at various stages of the human life cycle, supporting access to services for diverse social groups. Particular emphasis is placed on building a base of young customers up to 26 years of age by developing modern, digital solutions that meet their lifestyle and expectations.

Impact linked to the Strategy

 Organisation, Downstream Short Medium Long Opportunity

Actions to ensure service availability, such as developing digitalisation, simplifying access to banking or standardising telephone service, enable us to reach a wider group of clients. They facilitate contact with the Bank, increase customer satisfaction and support acquisition of new clients, which translates into revenue growth potential

 Downstream Short Medium Long
ESRS G1: CORPORATE GOVERNANCE
Business conduct Corporate culture Positive, actual: building a positive organisational culture and employee engagement

Our organisational culture that is based on mutual respect, openness to dialogue and a shared commitment to achieving the organisation’s objectives.

Impact linked to the Strategy

 Organisation Short Medium Long No material opportunities or risks identified. N/A N/A
Business conduct Whistleblower protection Positive, actual: an effective system and actions protecting whistleblowers

The Bank has a comprehensive Whistleblowing Procedure that goes beyond the minimum statutory requirements and includes several additional solutions supporting whistleblowers. The system provides above-standard support measures such as psychological assistance, the possibility of remote work or temporary reassignment to another position, and exemption from the obligation to work while retaining full remuneration.-standard support measures such as psychological assistance, the possibility of remote work or temporary reassignment to another position, and exemption from the obligation to work while retaining full remuneration.

Impact linked to the Strategy

 Upstream, Organisation, Downstream Short Medium Long No material opportunities or risks identified N/A N/A
Business conduct Whistleblower protection Negative, potential: insufficient protection of whistleblowers

We assume the possibility of situations in which persons reporting irregularities, known as whistleblowers, suffer retaliation. Such situations may manifest in various forms of difficulties at work or changes in the treatment of these persons. As a result, this may lead to reduced trust in the available reporting channels, as employees may fear negative consequences resulting from disclosing irregularities.

Impact linked to the Strategy

 Upstream, Organisation, Downstream Short Medium Long No material opportunities or risks identified. N/A N/A
Business conduct Supplier relationship management, including payment practices Positive, actual: implementation of ethics/ESG principles for suppliers

We have implemented the Bank Pekao S.A. Supplier Code of Ethics, which sets out expectations for suppliers in ESG areas. The Bank analyzes reports submitted through the whistleblowing system and verifies supplier documentation. In addition, we apply ESG Forms in every procurement procedure, which enables ongoing verification of suppliers in terms of environmental protection, human rights, and corporate governance.

Impact linked to the business model

 Organisation Short Medium Long No material opportunities or risks identified N/A N/A
Business conduct Corruption and bribery Positive, actual: proactive anti-corruption measures, educational activities

We implemented anti-corruption training, concluded with a knowledge test, which raises awareness of principles and procedures and supports their application in daily work. Enforcement of principles is ensured through reviews of internal regulations and regular compliance checks carried out by the Compliance Department, and periodic reporting to the Management Board and the Supervisory Board. If any solution is found to be ineffective, corrective actions are implemented.

Impact linked to the business model

 Organisation Short Medium Long No material opportunities or risks identified N/A N/A
Business conduct Corruption and bribery Negative, potential: incidents of corruption and bribery

Despite the policies in place to prevent instances of corruption and bribery, it is not possible to eliminate them entirely. All positions within the Bank are equally exposed to the risk of corruption.

Impact linked to the business model

 Organisation, Downstream Short Medium Long No material opportunities or risks identified N/A N/A

Material impacts, risks and opportunities and their interrelationships with the strategy and the business model

REASON FOR CHANGE DESCRIPTION OF CHANGE
Expansion of the list of impacts to include a catalogue of potential negative impacts due to the rapidly changing regulatory and market environment We have identified the following additional potential negative impacts as material, due to the Bank operating in an increasingly complex regulatory environment and growing stakeholder pressure, as well as increased customer awareness and expectations:

  • ESRS S4: Misleading customer practices; mis-selling – We assume that cases may potentially occur where customers are misled by overly complex or unclear marketing and advertising messages, which may lead customers to make incorrect financial decisions. At the time of preparing the Sustainability Statement, no fine has been imposed on the Pekao Group in connection with the use of practices misleading consumers.
  • ESRS G1: Insufficient whistleblower protection – We assume the possibility of situations in which persons reporting irregularities, known as whistleblowers, suffer retaliation. Such situations may manifest in various forms of difficulties at work or changes in the treatment of these persons. As a result, this may lead to reduced trust in the available reporting channels, as employees may fear negative consequences resulting from disclosing irregularities.
  • ESRS G1: Incidents of corruption and bribery – We are aware that, despite the policies in place to prevent cases of corruption and bribery, it is not possible to eliminate them entirely.
Combination of impacts overlapping in type with ESRS impacts We have removed from the summary of material impacts the following duplicate impacts overlapping with other material impacts previously assigned directly to ESRS:

  • Sustainable finance (additional topic under ESRS E1) – positive impact linked to financing environmentally sustainable activities. Topic described under IRO Climate change mitigation in ESRS E1.
  • Financial education (additional topic under ESRS S4) – positive impact linked to information programmes, workshops and information campaigns for a broad audience on the use of banking products, investing, household budgeting, saving, etc. Topic described under IRO Consumer privacy.
  • Cybersecurity and data security (additional topic under ESRS S4) – positive impact linked to a high level of data and systems protection and investment in modern technologies supporting data security. Topic described under IRO Consumer privacy.
  • Personal safety of consumers or end-users (ESRS S4) – positive impact linked to consumer protection through the implementation of technological, organisational and system solutions. Topic described under IRO Consumer privacy.
EFRAG’s approach to compliance activities presented in the simplified ESRS We have removed the following impacts from the summary of material impacts:

  • ESRS S1: Effective employee privacy protection system – In connection with the update of the materiality assessment approach, in accordance with EFRAG guidelines, the Bank does not treat compliance with legal obligations as a positive impact. We have identified the area of employee privacy protection as a compliance activity, resulting, among other things, from the requirements of the GDPR. Its effectiveness is confirmed by the results of employee surveys.
  • Tax transparency (additional topic under ESRS G1) – cooperation with tax authorities and compliance with CRS / FATCA regulations; following the renewed review of the double materiality assessment, we have concluded that these activities constitute basic legal compliance and fall within the compliance area. Therefore, they should not be classified as material IRO and, accordingly, their further presentation as a material positive impact was discontinued.
Assumptions of the Strategy for 2025–2027 We have removed the following impacts from the summary of material impacts:

  • ESRS E1: Financing activities supporting climate change adaptation – As a result of the review of the double materiality analysis approach, we clarified the differences between climate change mitigation and climate change adaptation. The material positive impact is exerted primarily through financing actions supporting climate change mitigation, which follows directly from the assumptions of the Group’s Strategy for 2025–2027, which focuses on supporting the transition towards a low-carbon economy. At the same time, financial products financing climate change adaptation strictly as such do not yet constitute a significant part of our business.

We have changed the allocation of opportunities to the sub-topics provided for in ESRS E1:

  • For 2024, we have identified material opportunities in this area in the Climate change adaptation and Climate change mitigation sub-topics. The objective resulting from the Strategy for 2025-2027 and the sustainable financing provided by the Group to date mainly concern activities related to the environmental objective of Climate change mitigation within the meaning of the EU Taxonomy. Therefore, we have identified a material financial opportunity in the sub-topic Climate change mitigation under ESRS E1 and removed from the list a material opportunity that was related to the sub-theme Climate change adaptation for 2024.

We have identified an additional material financial opportunity:

  • ESRS S4: Ensuring the availability of financial services for customers from different social groups – Actions to ensure service availability, developing digitalisation, simplifying access to banking or standardising telephone service, enable us to reach a wider group of clients. They facilitate contact with the Bank, increase customer satisfaction and support acquisition of new clients, which translates into revenue growth potential.
Conducting an in-depth ESG risk materiality analysis, aligned with the new EBA Guidelines on ESG risk managemen We have identified an additional material financial risk:

As a result of the update of the double materiality assessment, we assessed climate-related transition risk concerning the loan portfolio as material over the long-term time horizon.

This results from conducting a more in-depth materiality analysis than in the previous year, aligned with the new requirements of the EBA Guidelines on ESG risk management – i.e., taking into account:

  • broader use of quantitative contextual data, for example in relation to indicators of portfolio alignment with the global Net Zero 2050 scenario,
  • an available – for the first time – detailed market benchmark of conclusions from double materiality assessments conducted under ESRS by other market participants,
  • conclusions arising from the work carried out by the Bank on the Transition Plan portfolio, in line with the requirements indicated by the EBA Guidelines.

Resilience analysis of Pekao Group’s Strategy and business model in terms of our ability to counteract material adverse impacts and risks and to leverage material opportunities

In the second half of 2025, we carried out a qualitative and quantitative analysis of the resilience of our Strategy and business model to material adverse impacts and risks, taking into account the context of our ability to leverage material opportunities (hereinafter: the “resilience analysis”).

As a first step, for each material adverse impact, we verified whether incidents of materialisation of a given adverse impact had occurred over the last five years and examined the effect of those incidents on the stability and profitability of our operations. Depending on the nature of the adverse impact in question, we considered:

  • the cumulative increase in provisions over the period under review, in connection with the incident in question,
  • the result of the analysis of mass customer complaints in relation to the relevant matter,
  • the result of the analysis of mass court claims filed against Pekao Group in connection with the relevant matter,
  • verification as to whether the PFSA imposed an additional capital requirement on the Bank due to the incident.

Subsequently, for each adverse impact we analysed:

  • the scope of remedial and preventive actions implemented, and
  • remedial and preventive actions planned to be implemented, relating in particular to Pekao Group’s strategic objectives, as well as projects underway within Pekao Group.

We also considered whether, during the double materiality assessment, we assessed the risk linked to a given adverse impact as material. Assessing a given risk as not financially material through the double materiality assessment confirmed for us that the risk does not affect the resilience of our Strategy and business model. Where a material risk linked to a given impact was identified, we verified whether the remedial and preventive actions implemented or planned mitigate that risk sufficiently to ensure the resilience of our Strategy and business model.

Based on the resilience analysis performed, we conclude that Pekao Group’s Strategy and business model are resilient to material adverse impacts and sustainability-related risks over the time horizons indicated by ESRS.

We describe details of the remedial and preventive actions we undertake in respect of material adverse impacts and risks in the relevant thematic chapters of this Statement.

As indicated in the description of our approach to conducting the double materiality assessment, based on the analyses carried out, we identified one material adverse impact and one material climate-related risk – both relating to our loan portfolio.

The material adverse impact concerns Pekao Group’s financing of activities that generate greenhouse gas emissions, in particular high-emission investments. The material risk linked to that impact concerns climate-related transition risk (transformational risk), i.e., a potential decline in the debt-servicing capacity of high-emission entities over the long-term time horizon due to higher regulatory costs and shifts in demand towards a low-carbon economy.

Given the long-term perspective of the materiality of climate risk, we examined our resilience to the identified climate risk using climate transition risk stress tests on the Bank’s loan portfolio credit risk, developed by the Bank for the first time in the second half of 2025. Stress tests were performed solely for the Bank, due to the material share and scale of its loan portfolio within the overall Group. The loan portfolios of the other Pekao Group companies are immaterial from a climate risk standpoint and therefore were not covered by a separate resilience analysis.

For this purpose, we estimated the increase in expected credit loss provisions over a three-year horizon, using assumptions from the short-term climate shock scenario developed by the NGFS (Network for Greening the Financial System) entitled “NGFS Short-term Climate Scenario – Diverging Realities (DIRE)”, which we calibrated using expert judgement and overlaid on the baseline macroeconomic scenario. NGFS short-term scenarios are a tool enabling a structured analysis of the direct (almost immediate) effects of climate policies and climate change on financial stability and economic resilience. These scenarios also capture the macroeconomic effects of climate-related physical risk. In our view, they allow for an understanding of possible extreme adverse financial effects resulting from potential shock regulatory and technological actions aimed at the transition towards a low-carbon economy, which may occur across different time horizons – particularly over the long-term time horizon.

The estimated increases in provisions under the shock scenario of the climate stress tests do not pose a threat to the Bank’s financial result or the Bank’s capital adequacy.

Taking the above into account, as well as the fact that in this year’s EBA stress test exercise our Bank was among the most resilient to stress factors among the 64 European banks included in the sample, we consider our Strategy and business model to be resilient to the material adverse impact and the associated material climate-related risk. Nevertheless, we bear in mind that the long-term perspective of climate change projections and the volatility of the regulatory and technological environment mean that any estimates of their impact on credit risk are subject to a significant degree of uncertainty. Accordingly, we will perform climate risk stress tests on a regular basis, using the most up-to-date and most appropriate assumptions available in order to estimate as accurately as possible the potential effects of climate risk on our financial position.

We describe details of the remedial and preventive actions we undertake in respect of material climate-related matters in the chapter ESRS E1: Climate change. Our Transition Plan is a particularly important tool we have implemented to further build our resilience to climate risk is. We describe the assumptions of the Plan in the above-mentioned chapter of this Sustainability Statement. We assess that, as a Group, we have the capacity to adapt our Strategy and business model to climate change over the short-, medium- and long-term.

We began the resilience analysis in relation to material opportunities by mapping the material opportunities we identified to our strategic objectives set out in the Strategy. As a next step, we analysed whether and how we act proactively to leverage material opportunities related to sustainability. For this purpose, we considered:

  • what business actions and innovations are undertaken within the organisation as part of a proactive approach to leveraging the given opportunity,
  • whether and how the achievement of strategic objectives is monitored regularly,
  • what actions we assume would be taken if the achievement of a given strategic objective were at risk

Based on the resilience analysis performed, we conclude that we actively leverage the material opportunities related to sustainability that we have identified, which contributes to building the resilience of Pekao Group’s Strategy and business model over the time horizons indicated by ESRS.

We describe details of the actions we undertake to leverage material opportunities related to sustainability in the relevant thematic chapters of this Sustainability Statement.

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