2022 TCFD Report

The present document is the English translation of the Italian TCFD Report, prepared for and used in Italy, and has been translated only for the convenience of international readers.

© Photographic image by Massimo Siragusa - Volcano, Aeolian Islands.

Methodological note

Through its parent company BPER Banca, the BPER Banca Group (hereinafter also 'BPER Group' or 'Group'), joined the Task Force on Climate-related Financial Disclosure (TCFD) in 2021 on a voluntary basis in order to disclose its climate-related commitments to all its stakeholders with greater transparency.

The TCFD is an initiative established in 2015 by the Financial Stability Board (FSB) to address and quantify the risks generated by climate change on the stability of the global financial system. In 2017, the TCFD developed 11 recommendations set out within the 'Recommendations of the Task Force on Climate-related Financial Disclosures - Final Report' (hereinafter 'TCFD Recommendations') and the subsequent Annex 'Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures' (hereinafter 'TCFD Annex') published in 2021, aimed at promoting greater transparency on climate-related financial risks and guiding companies in reporting the information that investors and financial markets need in order to assess climate-related risks and opportunities.

Membership of the TCFD confirms and reinforces the Group's national and international climate commitments and is part of a broader framework of initiatives including adherence with United Nations frameworks such as the Principles for Responsible Banking (PRB) and the Net-Zero Banking Alliance (NZBA), for which the Group has embarked on a path to align its lending and investment portfolio with the 2030 and 2050 decarbonisation targets enshrined in the Paris Climate Agreement.

This TCFD Report (hereinafter also the 'Report') includes the Group's climate-related information prepared referring to the scopes of the 11 TCFD Recommendations: Governance, Strategy, Risk Management and Metrics and Targets. In particular, the Report was prepared on the basis of the following criteria:

  • Governance:
    • disclosure a) Description of the board's oversight of climate-related risks and opportunities description of the processes by which the Board oversees climate- related issues, the roles of the Board of Directors and its Internal Board Committees, and the monitoring frequency of climate-related activities. Description of how the
      Board addresses climate-related issues in the definition of corporate strategy and the monitoring process in relation to progress in the defined objectives;
    • disclosure b) Description of management's role in assessing and managing climate- related risks and opportunities: description of the operational roles in managing climate- related issues at management level and how management and the Board communicate about them.

• Strategy:

    • disclosure a) Description of the climate-related risks and opportunities the organization has identified over the short, medium, and long term: description of risks and opportunities by sector and geographical area, taking into account Tables A1.1 and A1.2 of the TCFD Annex. Description of how short, medium and long term time horizons are taken into account. Description of significant exposures of the loan portfolio and other financial assets in relation to physical and transition risks;
    • disclosure b) Description of the impact of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning: description of the areas on which the Group directs its strategic planning and of the scenario analyses carried out by the Group as a starting point for integrating climate factors into its credit policies and business strategies;
    • disclosure c) Description of the resilience of the organization's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario: description of the scenario analyses carried out by the Group considering scenarios consistent with a transition to a low-carbon economy, taking into account Section D of the TCFD Recommendations.
  • Risk management:
    • disclosure a) Description of the organization's processes for identifying and assessing climate-related risks: description of the risk identification and management process adopted by the organisation. Description of climate risk factors in relation to traditional banking risks (credit risk, market risk, operational risk, reputational risk, liquidity risk and strategic risk);
    • disclosure b) Description of the organization's processes for managing climate-related risks: description of the risk management process, taking into account Tables A1.1 and
      A1.2 of the TCFD Annex;
    • disclosure c) Description of how processes for identifying, assessing, and managing climate-related risks are integrated into the organization's overall risk management: description of the identification process for identifying, assessing and managing climate-related risks and integration into the Group's risk management framework.
  • Metrics and targets:
    • disclosure a) Disclosure of the metrics used by the organization to assess climate- related risks and opportunities in line with its strategy and risk management process: description of the metrics selected to measure climate-related risks and opportunities associated with energy use, direct and indirect emissions, and the Group's level of exposure to physical and transition risks by sector and geographic area, taking into account Table A2.1 of the TCFD Annex;

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  • disclosure b) Disclosure of Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks: reporting of direct Scope 1 and indirect Scope 2 and Scope 3 emissions, including emissions related to the credit and securities portfolio, in line with the GHG Protocol methodology and the PCAF Standard;
  • disclosure c) Description of the targets used by the organization to manage climate- related risks and opportunities and performance against targets: description of the climate-related objectives defined by the Group as part of its Business Plan, in the medium and long term.

The disclosures included in the TCFD Report were subject to a limited assurance engagement according to the criteria set forth in the ISAE 3000 Revised principle by Deloitte & Touche, on a voluntary basis.

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Contents 1

3

Introduction

  1. The Current Context
  2. The Group's Role
    1. Commitments and Memberships
    2. Results Obtained
    3. Climate Action
  4. Executive Summary

2

Governance

  1. Presentation of Group Governance
  2. Governance of Top Management on Climate
    1. Roles and Responsibilities of the Board of Directors
    2. Roles and Responsibilities of the Internal Board Committees
    3. The Board's Self-Assessment
  4. The ESG Management Committee
  5. The ESG Strategy Office
  6. Remuneration Policies
  7. Climate-RelatedTrainings

6

Strategy

20

6

3.1 The Group's Sustainability Framework

20

7

3.2 Climate-related Risks and Opportunities

21

7

3.2.1 Climate-related Risks

21

8

3.2.2 Climate-related Opportunities

22

9

3.3 Group Strategy

23

10

3.3.1 Enhancing the Green Offer

23

3.3.2 Redesigning the Data Governance Model

27

3.3.3 Engaging the Value Chain

27

3.3.4 Reducing Direct Impacts

28

3.4 The Evolution of Strategic Planning from an ESG Perspective

29

14

3.5 Architecture of the Scenario Analysis

30

14

3.5.1 Physical Risk

30

15

3.5.2 Transition Risk

32

15

3.6 Calculating the Carbon Footprint of the Portfolio

34

15

3.7 Alignment with Supervisory Expectations

35

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Disclaimer

BPER Banca S.p.A. published this content on 28 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2023 13:29:48 UTC.