2022 Annual Report

Indirect environmental impact

2022 Annual Report


One of the tools for managing credit risk for selected industries/sectors is lending policies.

The Bank has the following policies: Renewable Energy Sources, Carbon-Intensive Energy Sector, Chemistry-Oil-Gas, Revenue Real Estate (adopted and implemented in 2022), Construction and building materials, Car Dealers and CFM companies, Public Healthcare, Trade, LGU (adopted and implemented in 2022).

Apart from the aforementioned policies, the Bank (in the corporate segment) monitors changes and market trends in various industries/sectors on an ongoing basis, publishes internal materials (e.g., industry leaflets identifying current market trends) and organizes industry meetings. These measures have a direct impact on the high quality of the loan portfolio. The policies that have an impact on the environment and the climate are discussed below.

Adopted and implemented in 2020 for the Bank and the Bank’s Group. Revision in 02/2022 (extension of the catalogue of collaterals and repayment sources).

Purpose: gradually increasing the share in the financing of renewable energy. Motivation: supporting the natural environment, preventing global climate change, transformation of Poland into a zero-emission economy.

The policy defines the preferred directions of development of the loan portfolio in the renewable energy segment. It is focused in particular on the financing of photovoltaic farm and wind turbine projects. However, other projects can also receive financing. Project assessments performed by the Bank include an analysis of the following issues: formal documents, transaction parameters, sources of repayment (e.g. a successful renewable energy auction, PPA), as well as the investor’s capital resources and experience.

Adopted and implemented in 2019 for the Bank and the Bank’s Group, updated in 2020 (tightening of the financing conditions in order to raise environmental awareness and support and accelerate eco-transformation). Industry leaflet: 02/2022.

Purpose: a gradual change in the loan portfolio structure by reducing the exposure to customers and transactions based on coal as an energy carrier (in line with the European climate policy and aiming for net zero emissions by 2050).

The policy covers, among other things, the following industries: coal and lignite mining, coal-related sectors (e.g. production of mining machinery, trading in coal and similar products), generation of electricity/heat (with the exception of RES) and supplementary activities in the power sector (transmission, distribution, heat and power plants).

The main policy assumptions:

  • with respect to coal and lignite mining, production of boilers, fireplaces and burners (coal-fired) – reducing the exposure (with the exception of coke as a raw material entered on the EU list of critical raw materials),
  • with respect to energy/heat production – not financing any new coal- or lignite-based sources and gradual reduction in the existing exposure, whereas in 2022, in view of the war in Ukraine and the increase in energy commodity prices and the need to secure coal supplies from alternative sources other than Russia, thus pursuing its social responsibility dimension, the Bank decided to increase its financing in the district heating sector and to selectively finance energy security transactions (coal purchases) on a transitional basis,
  • reducing general purpose financing and transforming it into ESG financing, aimed at improving energy efficiency, changing the energy mix or modernization of transmission networks (coal-based projects can be financed on the condition that the funds are spent on modernization aimed at meeting the environmental requirements; in such cases, the purpose of financing must be precisely defined and the use of funds must be controlled),
  • with respect to coal-related industries (e.g. production of mining machinery, trading in coal and coal-based products) – gradual reduction in exposure, precise definition of the purposes of financing and control of its use, financing of entities with diversified customer or product/service portfolios (i.e. generating significant revenues from other sources not related to mining) and/or those transforming their operations is acceptable.

Adopted and implemented in 2019 for the Bank and the Bank’s Group. Industry leaflet: 09/2021.

Policy for Financing the Chemistry, Oil and Gas Sector defines, among other things, the framework for financing entities operating in the sectors of oil and natural gas extraction, production and distribution of liquid and gaseous fuels, production and trading in chemicals/chemical products, and production and sales of rubber and plastic goods. The Bank adopted a strategy for reducing engagement for activities covered by the Directive of the European Parliament and of the Council (EU) 2019/904 of 5 June 2019 on the reduction of the impact of certain plastic products on the environment and a prudent approach to the mining industry, oil and gas mining, chemicals, chemical products and rubber products. The prudent approach is reflected in, among other things, an assessment of compliance with environmental standards and the impact on the environment and an evaluation of the business model with regard to the concept of sustainable business development. The future shape of this policy may be affected by changes in EU law, e.g. with regard to the approach to the use of natural gas during the period of energy transformation, as well as the growing requirements in the ESG area.

Adopted and implemented in 2022.
Industry leaflet: 06/2022 (for residential real estate).

The policy defines the framework for financing entities in the commercial real estate market and developers on the residential property market, and indicates the main assumption of cooperation with the best players on the market, financing the highest quality assets in the best locations, and reducing the speculative phase.

The policy defines operating limits of concentration, including individual types of assets and geographical ones.

The policy defines recommended boundary parameters for the transaction, as well as the structure of clauses and collaterals. In assessing the business model and identifying risks, the policy recommends taking into account the concept of sustainable business development, including benefits that can bring business to both stakeholders, local communities and the environment.

Adopted and implemented in 2020 for the Bank and the Bank’s Group.

The policy indicates preferred transaction parameters and introduces good practices/standards for financing public hospitals.

Environmental aspect: collection, sorting, storage, transfer, transport and method of disposal of hospital waste (mainly medical) regulated by the law (e.g. the Act on waste, Environmental Protection Law => municipal waste => disposal in accordance with local regulations, medical waste => disposal by a specialist company (e.g. incineration)).

ESG in the lending process

Since 30 June 2021 each time the Bank assesses the impact of the ESG factors on a customer’s creditworthiness in the corporate segment and in the companies and enterprises segment, evaluated using rating method.

The Bank takes into account data on energy consumption and the customer’s greenhouse gas emissions, as well as on its plans to reduce emissions and adapt to climate changes.

The Bank also examines the impact of credit transactions on ESG and classifies them to four categories, from transactions with a positive impact on ESG to those with material negative impact. When assessing the ESG factors, the Bank takes into account such factors as the risk of climate change and its impact on the customer’s operations, potential influence of the customer on climate, factors related to human capital or health and safety, and governance factors (including the corporate culture and internal audit).

By using appropriate tools, the Bank estimates ESG risks, assesses and controls them.

The identification of ESG risks allows the identification of projects which do not meet the increasingly high environmental and social requirements. By identifying these risks, the Bank may support the financing of environmentally sustainable and socially responsible projects, as well as eliminate the financing of activities/projects with a negative impact on the environment.

As part of promoting knowledge about the ESG, the Bank organises internal meetings and presents ESG issues in contacts with representatives of selected industries.

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