ERSTE GROUP BANK AG 
(Consolidated) non-financial report
Table of contents
1. | Sustainability at Erste Group | 50 | |
1.1 | ESG Strategy | 50 | |
1.2 | Governance | 53 | |
1.3 | Stakeholder engagement | 56 | |
1.4 | Material topics | 56 | |
2. | Climate and environment | 57 | |
2.1 | Sustainable finance and investment | 57 | |
2.2 | Limiting financing in high-emission sectors | 60 | |
2.3 | Financing of environmentally sustainable economic activities | 64 | |
2.4 | Ecological impact of banking operations | 66 | |
3. | Our employees | 70 | |
3.1 | Employee involvement and representation | 71 | |
3.2 | Diversity and equal opportunity | 72 | |
3.3 | Employee health and work-life balance | 74 | |
3.4 | Talent attraction and retention | 76 | |
4. | Our customers | 78 | |
4.1 | Customer satisfaction | 78 | |
4.2 | Data security | 80 | |
5. | Our social responsibility | 81 | |
5.1 | Access to banking products for disadvantaged groups | 81 | |
5.2 | Financial education | 84 | |
6. | Business ethics | 86 | |
6.1 | Ethical conduct of employees in banking operations | 86 | |
6.2 | Anti-corruption measures | 87 | |
7. | GRI Index | 90 | |
8. | Principles for Responsible Banking Reporting | 97 |
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Management board | | | Supervisory board | | | Capital markets | | | Strategy | | | Business overview | | | Development in the core markets | | | Non-financial report | | | Corporate governance report |
ABOUT THIS REPORT
Erste Group has decided to prepare its non-financial statement as a separate non-financial report (option pursuant to section 267a para 6 / section 243b para 6 of the Austrian Commercial Code; UGB) and to combine the non-financial report for Erste Group Bank with the consolidated non-financial report for the group. The scope of consolidation is shown in Note 46 of the 2022 consolidated financial statements. As a matter of principle, information in this report relates to entities in the said scope of consolidation. Where this is not the case, this is indicated in the text.
We report annually about our strategy, goals, achievements, opportunities and risks in the area of sustainability in conformity with GRI Standards 2021 and follow the recommendations of the Task Force on Climate Related Financial Disclosures (TCFD). The information below covers the reporting period from 1 January to 31 December 2022.
Group ESG Office has drawn up this report and compiled information and data from all group divisions and units. The report was completed by the management board as of the date of its execution and will be reviewed by the Supervisory Board prior to publication. As commissioned by the Supervisory Board's Audit Committee, PwC Wirtschaftsprüfung GmbH, one of the two external accountants tasked with auditing Erste Group Bank AG's single-entity financial and consolidated financial statements for the 2022 fiscal year, conducted a limited assurance engagement in accordance with ISAE 3000; the report provided is released on 31 March 2023.
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1. Sustainability at Erste Group
The foundation of Erste Group is its belief in people, their ideas and plans for the future, their skills and potential for personal development as well as a promise to disseminate and secure prosperity throughout the region.
"No age, no gender, no social class, or nationality shall be excluded from the benefits that Spar-Casse offers every depositor." This excerpt from the founding charter of 1819 summarises the underlying idea that applies today as it did back then.
1.1 ESG STRATEGY
GRI 2-22,2-24,2-29
Our promise to key stakeholders
For us, it is important that our sustainability efforts are perceived as a clear promise of value to our most important stakeholder groups and that these efforts meet their expectations.
Our goal is to secure our customers' prosperity through our advisory and sustainable financial products. The products are developed and promoted with due care in terms of accessibility, security, transparency and responsibility for the environment. Erste Group guarantees data protection and security in all relevant services.
We want our employees to benefit from our services and participate in the company's success, which has been achieved through sustainable and efficient service to our customers. We care about the development of talents, a work-life balance and proper working conditions and will not tolerate any discrimination.
To ensure that our shareholders receive a reasonable and, in the long run, sustainable return, we pursue an inclusive growth strategy and ensure resilient company value. We build our sustainable growth and our resilience on the long-term success of our customers and on the support of their transition to a resource- efficient and emission-free business model.
"Sustainability and growth are no contradiction"
Willi Cernko, CEO
We firmly believe that Erste Group's economic success in our region can be sustainable only if the green transition is successful and social justice is advanced. These two dimensions of the long- term prosperity of the region are perfectly aligned with the significance and historical role of Erste Group.
We strive to be a role model and a leader in the green transition by mobilising resources for climate action, investment in the preservation of clean water and the transition to a circular economy. We believe that the green transition will be an opportunity for
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people in the CEE region. We also believe in a fair transition for all and therefore help our customers to secure their personal prosperity. The bank's efforts towards inclusiveness in society are as relevant today as they were 200 years ago. The social cohesion of our societies creates a strong and reliable basis for a well- functioning socio-economic environment that will bring prosperity to many. We therefore launch effective initiatives to promote financial inclusion, social banking, financial education, affordable housing and gender equality.
These are, therefore, our strategic priorities in the pursuit of sustainability:
Green transition - leading finance company
_ Strengthening our leading position in green finance in CEE and the region to secure growth opportunities for the future.
_ Creating the foundations for achieving climate neutrality of our portfolio by 2050 - our contribution to climate protection and at the same time the prerequisite and basis of the long- term resilience of our customers and our investments.
_ Being a role model for effective climate action: climate neutrality of our banking operations by 2023.
Social inclusion - social cohesion through integration
_ Promoting financial inclusion through our social banking ac- tivities, thereby strengthening social cohesion and a civil so- ciety.
_ Helping our customers and the younger generation to gain financial health and a financial education.
_ Investing in affordable housing and contributing to the well- being of the lower-middle class, including in particular young professionals, young families and civil servants.
_ Promoting gender diversity as a significant element of a healthy corporate culture.
We take this responsibility very seriously. To secure long-term survival and create value for customers, investors, employees and society as a whole, it is our responsibility in managing the bank to resolve conflicting targets such as profitability and the environmental and social impacts of our activities in a positive manner and to take advantage of the enormous opportunities that arise in these times of transformation and change.
Management board | | | Supervisory board | | | Capital markets | | | Strategy | | | Business overview | | | Development in the core markets | | | Non-financial report | | | Corporate governance report |
The investment need is enormous:
An essential portion of these funds will be provided by the EU or local sovereign funds as shown in the national recovery and resilience plans and national energy and climate plans. Until
Baselines of our sustainability strategy
Green transition
Our long-term strategic considerations regarding the financial resilience of Erste Group's business model while taking into account sustainability-related risks are based on a comprehensive analysis of climate-induced challenges and the legislative and economic impacts of climate change in our region ("Climate Change House View"). The European Climate Law, the EU's Green Deal and the Fit for 55 Package form the setting for future changes in EU strategy and legislation. All countries of the region will have to align with these European goals, manage their impact on their economies and adapt their investment and consumer expectations.
2030, however, public funds will need to be supplemented by the private sector in an expected amount of approximately EUR 30 billion per year. In this effort, Erste Group is seeking to play a leading role.
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Social inclusion
Since the last financial crisis, the risk of poverty and social exclusion has been declining in all of our markets, but there is persistently high and little improvement in working poverty (as many people work for minimal wages, partly compensated by income from the shadow economy). The rise in the cost of living across the region has also had an adverse impact on satisfaction with living standards. A low supply of new affordable housing and the
Concrete measurable targets
Our short and medium-term targets are derived from these analyses:
Our path to net zero
As member of the Net-ZeroBanking Alliance, Erste Group firmly believes that decarbonisation is possible and necessary. Erste Group is convinced that the development of a forward- looking strategy leading towards net zero will not only produce important insights into the future development of the market and visibility of emerging risks but will also create opportunities. This knowledge allows us to be one step ahead and it will support growth and resilience in the future.
As planned, we have set ambitious milestones for this path in early 2023. We have designed the planning process in such a way that we have been able to develop plausible targets that are based on science and are endorsed by the management across all of our markets.
near absence of a social housing sector is leading to substantial overcrowding in CE, as many young people cannot afford to move out of their parents' homes. As property prices have risen over the past decade, not only the young and those on low incomes are barely able to afford to buy homes in larger cities, but even the middle class. Energy poverty (inability to pay for fuel), which still affects some 10% of the population, underlines the strong need for energy efficiency action and refurbishment of old buildings.
Based on the calculation of financed CO2e emissions for each portfolio (see chapter 2.2 "Limiting financing in high-emission sectors"), we have defined sectors such as energy, retail mortgage lending and commercial real estate as priority areas. These sectors account for around 50% of our financed Scope 1+2 CO2e emissions and, against the backdrop of available technologies, regulatory standards and market experience, offer good potential for emission reductions.
Target identification and forecasts rely on existing and projected customer data, scientific scenarios and data from the International Energy Agency. The results have been used as inputs in our strategic financial planning.
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Erste Group Bank AG published this content on 31 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 March 2023 16:09:20 UTC.
