Rizal Commercial Banking : RCBC 2020 Sustainability Report

Contextual Information

Rizal Commercial Banking Corporation (RCBC) started in 1960 as a development bank and received its license as a commercial bank three years later. It expanded its operations in 1989 as a universal bank. RCBC is one of the largest universal banks in the Philippines, with total consolidated resources of Php772 billion as of December 31, 2020.

As a diversified financial services institution, RCBC serves corporate and individual banking needs using various customer channels to offer innovative products and services to its chosen markets. It has an inclusive financial business model that expanded in 2009 when it ventured into the microfinance business via Rizal MicroBank to serve small entrepreneurs.

RCBC employs best practices in the areas of environmental and social responsibility, and corporate governance. In August 2020, RCBC was recognized by the Asian Banking & Finance Awards as the Philippines Domestic Initiative of the Year for Sustainable Financing. This was followed by recognition from the Global Banking & Finance Review in December, naming RCBC as the Best Green Bank Philippines 2020. Previous to these, the Bank was awarded "The Asset Benchmarking Award for Excellence in Environmental, Social, and Governance (ESG) - Titanium Award" by The Asset 2019 ESG Corporate Awards. Its landmark Php8.0-billion ASEAN Sustainability Bond, the first ASEAN Sustainability Bond issued in the Philippines, has also earned for RCBC the "Best Issuer for Sustainable Finance - Financial Institution" and "Best Sustainability Bond" in 2019.

In December 2020, RCBC's rating was upgraded from "A" to "AA" by Morgan Stanley Capital International (MSCI) ESG Ratings, indicating sound business organization and risk mitigation. The rating upgrade has placed RCBC in a Leader ESG ranking (MSCI ESG ratings of AA and AAA).

2

Materiality Process

Explain how you applied the materiality principle (or the materiality process) in identifying your material topics.

Significant economic, environmental, and social impacts of the organization:

As one of the largest banks in the Philippines, RCBC recognizes its role in maintaining stability in the financial services sector in support of the economy, while ensuring that the welfare of the environment and communities are sustained. This is the Bank's response to the BSP's call for financial institutions to be enablers of environmentally and socially responsible business decisions, as articulated in the BSP Circular 1085 on Sustainable Finance Framework (issued in April 2020).

By investing in its employees and pushing for digital transformation, RCBC is able to provide products and services that enable its customers to recover from the changing environment brought about by the global pandemic, build resilience, and identify new opportunities. By adopting an inclusive financial business model, RCBC is able to respond to the needs of the SME, the underserved, and the unbanked sectors. In 2020, the combination of RCBC's inclusive financial business model and drive toward digital transformation became instrumental in the distribution of the government's Social Amelioration Program funds amidst the prevailing pandemic. Internally, the implementation of work arrangement changes to protect the health and safety of its employees, while actively pursuing customer engagement activities facilitated prompt response to the extraordinary needs of its manpower complement and customers while coping with the restrictions of the pandemic. These are notable illustrations of RCBC's impact, where economic, social, and environmental activities are effectively intertwined.

By being an early adopter of sustainable banking practices, RCBC contributes in addressing the increasing concern on the environment and society. This has stimulated an encouraging trend in the Environmental, Social, and Governance (ESG) space within the banking industry, providing an early support for BSP Circular 1085.

In this report, topics considered material are those relevant to and centered on the above significant impacts.

Information that substantively influences the assessments and decisions of stakeholders, including investors:

Information instrumental to assessments and decisions of stakeholders are largely focused on the customer and the need to foster customer trust. This includes data on customer engagement/customer satisfaction, customer privacy, upholding the rights of the customer, data security, and business ethics.

Assessments relevant to the customer can only be meaningful when RCBC, as a financial institution, is stable and responsive to changing times. Given this, information on economic data/results is substantively influential, as well as the means to achieve such results through investments in human resources, talent training and development, technological advancements, and commitments to ESG principles.

With RCBC's own Sustainable Finance Framework in place, information on customer operating metrics that impact the environment and society also become substantively influential.

As a responsible financial institution, information on compliance with all relevant laws and regulations is

3

Explain how you applied the materiality principle (or the materiality process) in identifying your material topics.

material.

Matters that substantively affect the organization's ability to create value over the short, medium and long term:

RCBC is able to create value through its products and services. The ability to offer and continually develop these products and services is anchored on the Bank's financial capacity to recover from the impact of the global pandemic, management and talent support, resilience in operations, and efficient supply chain. Given this, matters pertaining to economic results and financial well-being, protection for the health and safety of employees, human resource support and talent pipeline, adaptability of operations to crisis/changing circumstances, and supplier actions are considered material as these may substantively affect RCBC's ability to create value over the short, medium, and long-term.

4

Material Topics

ECONOMIC

5

This is an excerpt of the original content. To continue reading it, access the original document here.