Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Social Achievements

• Financial literacy program assisted more than 7,000 individuals.
• Employee volunteerism in over 25 non-profit organizations.
• $1 million in total donations to over 130 not-for-profit organizations.
• 156% increase in qualified CRA commitments, totaling $192 million.

Governance Achievements

• Formally adopted an ESG framework.
• Established a management-level ESG Committee.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impact on business, operations, employees, credit quality, financial condition, and net income.
• Uncertainty regarding Puerto Rico's economic condition and government actions.
• Risks related to the integration of Banco Santander Puerto Rico.
• Rapid technological changes and operational risks.
• Litigation risks.
• Reputational risks.
• Potential impairment of goodwill or other intangible assets.
• Limitations on the use of net operating loss carryforwards.
• Interest rate shifts and accelerated prepayments.
• Discontinuation of LIBOR.
• ESG risks.
• Natural disasters, political crises, and other catastrophic events.
• Labor shortages and supply chain constraints.
• Failure of other financial institutions.

Mitigation Strategies

• Successful integration of Banco Santander Puerto Rico operations.
• Improved digital engagement and new digital offerings.
• Continued evolution of ESG program.
• Enhanced employee value proposition.
• Investments in technology.
• Participation in SBA PPP loan program and loan modifications.
• Maintaining strong liquidity and capital levels.
• LIBOR Transition Working Group to manage the transition to alternative reference rates.
• Information Security Program to monitor cyber-related risks.
• Risk management framework to monitor, evaluate, and manage principal risks.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Sustainability Accounting Standards Board, United Nations Sustainable Development Goals

Environmental Metrics

ESG Focus Areas

• Environmental Stewardship
• Diversity, Equity, and Inclusion (DEI)
• Financial Inclusion
• Economic Development
• Responsible Banking
• Corporate Governance

Environmental Achievements

• Expanded recycling program to include organic residues, single-stream plastics, and heavy metals
• Launched Rescate Costero initiative to plant 25,000 trees (2,700 planted by year-end)
• Continued transition to LED lighting (95% complete)
• Reduced paper consumption through internal campaigns and e-statements (335,000 sheets saved)

Social Achievements

• Donated over $1.4 million to support over 30 nonprofit organizations
• Provided approximately $150 million in small business loans and $469 million in community development loans
• Hosted over 300 financial literacy workshops
• Conducted a pay equity exercise resulting in salary adjustments
• Expanded DEI efforts, including roundtable sessions and training
• Reduced employee turnover rate

Governance Achievements

• Adopted a Human Rights Statement
• Revised Service Provider Code of Conduct to include social responsibility standards
• Incorporated ESG-related objectives into individual goals for certain members of the Executive Leadership Team
• Continued maturing of Corporate Sustainability Program since 2021, including implementing a Sustainability Policy and assigning ESG roles and responsibilities within the Board and the ELT

Climate Goals & Targets

Environmental Challenges

• Navigating the aftermath of a global pandemic
• Sharp rise in short-term interest rates
• Industry fallouts
• Climate change impacts (hurricanes, earthquakes)
• ESG-related regulatory changes and investor expectations

Mitigation Strategies

• Robust risk management framework and stress testing
• Business Continuity Management Program
• Implementation of the TCFD framework
• Integration of ESG factors into commercial loan credit policy
• Proactive increase in minimum wage and base salaries
• Expansion of DEI initiatives and training
• Community engagement and stakeholder feedback

Supply Chain Management

Responsible Procurement

• Revised Service Provider Code of Conduct
• Vendor Risk Assessment including ESG considerations
• Third-party risk management for cybersecurity

Climate-Related Risks & Opportunities

Physical Risks

• Hurricanes
• Floods
• Earthquakes
• Extreme weather

Transition Risks

• Regulatory changes
• Market shifts
• Changes in consumer and business behavior

Opportunities

• Financing for clean and renewable energy sectors

Reporting Standards

Frameworks Used: UN Sustainable Development Goals (SDGs), Sustainability Accounting Standards Board (SASB) - now part of IFRS Foundation, Task Force on Climate-Related Financial Disclosures (TCFD)

UN Sustainable Development Goals

• Goal 1: No Poverty
• Goal 4: Quality Education
• Goal 5: Gender Equality
• Goal 8: Decent Work and Economic Growth
• Goal 9: Industry, Innovation, and Infrastructure
• Goal 10: Reduced Inequalities
• Goal 13: Climate Action

Various initiatives described throughout the report contribute to these goals.

Awards & Recognition

• SBA Bronze Lender of the Year
• BEST OF Awards from the Daily Business Review