Climate Change Data

Environmental Metrics

ESG Focus Areas

• Business ethics
• Environment
• Community
• Employees
• Customers
• Suppliers
• Shareholders and Investors

Environmental Achievements

• Participation in the Carbon Disclosure Project
• Launched first SRI fund devoted to climate change (KBC Eco Fund Climate Change)
• Continued support of ARGUS, the independent provider of information on the environment in Belgium
• New award-winning, environmentally friendly head office of Czech subsidiary CˇSOB opened
• In Belgium, signing of the FSC Covenant – combined action plan of paper reduction and switching to FSC-labelled or recycled paper
• Launch of the GREENlease label – KBC-Autolease, in co-operation with ARGUS in Belgium
• Increased procurement of green energy to 100% in Belgium

Social Achievements

• Drafted a new group-wide employee policy and a set of internal standards
• KBC named among top-4 financial services institutions for best practices in social dialogue by UNI Finance
• KBC ranked amongst top ten as ‘Best Employer’ in Belgium
• 64 million euros spent on training
• New group-wide customer stakeholder policy and new set of group-wide standards for customer complaints-handling
• Assets under management in SRI funds grew by 57%.

Governance Achievements

• Formal group-wide CSR policies to strengthen our CSR framework
• Approval and implementation of a second group-wide CSR Action Plan
• UN Principles for Responsible Investment (UN PRI) endorsed by asset management division
• New general investment policy, modelled on the UN PRI
• Implementation of a proxy voting and engagement policy

Climate Goals & Targets

Environmental Challenges

• Lack of a mature implementation framework for CSR policies
• Data quality issues with regard to performance indicators provided by individual entities
• Issues related to supply chain management processes
• Legacy issues in Central and Eastern Europe not fully consistent with group policy regarding weapons

Mitigation Strategies

• Incorporation of CSR into standard operational risk management duties
• Extrapolation of data for Belgium to group level for comparison purposes
• Revamping of existing supplier/contractor guidelines
• Implementation of new bonus and benefits systems in Central and Eastern Europe

Supply Chain Management

Responsible Procurement

• Incorporation of UN Global Compact principles into internal outsourcing and procurement guidelines
• Sustainability clause in procurement contracts

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products
• Renewable energy investments

Reporting Standards

Frameworks Used: GRI G3, UN Global Compact

Third-party Assurance: Ernst & Young Bedrijfsrevisoren BCVBA

Sustainable Products & Innovation

• SRI funds
• GREENlease label
• KBC Green Energy Loan

Awards & Recognition

• Building of the Year 2007 (CˇSOB headquarters)
• Runner-up in the Belgian Green Fleet Award
• K&H awarded ‘Best Business Donor’ by the Hungarian Donors’ Forum

Environmental Metrics

ESG Focus Areas

• Business ethics
• Financial resilience
• Climate change
• Employee engagement
• Financial literacy
• Environmental responsibility
• Entrepreneurship
• Longevity and health

Environmental Achievements

• Reduced greenhouse gas emissions by 9.13% in 2018 compared to the previous year
• Raised the target for cutting GHG emissions (excluding commuter travel) to a 25% reduction for 2015-20 and a 50% reduction for 2015-30. Achieved a 37.6% absolute reduction for 2015-2018.
• Issued a 500 million euro Green Bond, funding renewable energy and energy-efficient homes. Generated 302,119 MWh of renewable electricity and energy savings, avoiding 42,232 tonnes of CO2e emissions in 2018.
• Increased the share of renewables in the total energy credit portfolio to 43.8% in 2018 (from 41.2% in 2017).

Social Achievements

• Launched Pricos SRI, the first sustainable pension saving plan on the Belgian market.
• Increased the volume of SRI funds under management to 9 billion euros (on track to reach 10 billion euros by 2020).
• Team Blue initiative raised 500,000 euros for charities through employee participation.
• Increased employee engagement score above the European financial sector average.

Governance Achievements

• Became the first Belgian financial institution to endorse the UNEP FI Principles for Responsible Banking and sign the Principles for Sustainable Insurance.
• Established a Sustainable Finance Programme to implement TCFD recommendations.
• Joined PACTA (Paris Agreement Capital Transition Assessment) and the UNEP FI TCFD Banking Pilot.

Climate Goals & Targets

Environmental Challenges

• Climate change and its impact on financial services
• Managing and reporting climate-related risks and opportunities

Mitigation Strategies

• Endorsed TCFD recommendations
• Established an internal working group to define short-term actions and prepare a long-term action plan to align climate strategy and reporting with TCFD recommendations and the EU Action Plan on Sustainable Finance.
• Joined pilot projects to develop new forms of energy investment (ESCo).

Supply Chain Management

Responsible Procurement

• KBC Sustainability Code of Conduct for Suppliers and supplier assessment and performance monitoring

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards (Core option)

Certifications: ISO 14001

UN Sustainable Development Goals

• SDG 3
• SDG 7
• SDG 8
• SDG 12
• SDG 13

KBC's activities contribute to these SDGs through various initiatives detailed in the report.

Sustainable Products & Innovation

• Pricos SRI
• KBC Green Bond
• OnePlan Flex

Environmental Metrics

ESG Focus Areas

• Climate Change
• Financial Literacy
• Environmental Responsibility
• Entrepreneurship
• Longevity/Health

Environmental Achievements

• Reduced greenhouse gas emissions by 15% in 2019 compared to the previous year.
• Increased volume of sustainable funds to 12 billion euros at year-end 2019 (ahead of 10-billion-euro target for 2020).

Social Achievements

• Launched 'Team Blue goes Green' initiative, with over 24,000 employees participating in environmental actions.
• Increased volume of SRI funds to 12 billion euros at year-end 2019.
• Invested 30 million euros in learning and development.

Governance Achievements

• Signed the Collective Commitment to Climate Action (CCCA) and the UNEP FI Principles for Responsible Banking (PRB).
• Integrated sustainability into the remuneration systems of employees and senior management.

Climate Goals & Targets

Environmental Challenges

• Lack of objective data and metrics to assess climate risks associated with portfolios and indirect carbon impact.
• Need for new data to identify green assets based on technical environmental criteria, including the EU Taxonomy.

Mitigation Strategies

• Actively involved in pilot projects (PACTA, UNEP FI, PCAF) to map portfolio's impact on climate change.
• Developing methodologies to measure the impact of climate on business model and formulate evidence-based targets.

Supply Chain Management

Responsible Procurement

• Code of Conduct for Suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Acutely or chronically changing weather patterns (severe storms, prolonged droughts)

Transition Risks

• Changes to legislation and capital requirements, litigation, changes in client behaviour, technological innovations

Opportunities

• Development of energy-efficient products and services

Reporting Standards

Frameworks Used: GRI Standards (Core option), SASB standards

Certifications: ISO 45001 (KBC Belgium prevention service)

UN Sustainable Development Goals

• SDG 3
• SDG 7
• SDG 8
• SDG 12
• SDG 13

KBC contributes to these SDGs through its business activities and sustainability initiatives.

Sustainable Products & Innovation

• Green bond
• Green Loans and Green Bonds for corporate clients
• Green Project Finance
• Green mortgages
• Green insurance
• SRI funds

Environmental Metrics

ESG Focus Areas

• Environmental Responsibility
• Entrepreneurship
• Digital Literacy
• Longevity and Health

Environmental Achievements

• Reduced total GHG emissions from own operations by 71% compared to 2015 baseline year and achieved net climate neutrality in terms of direct environmental footprint.
• Achieved 100% renewable electricity consumption.

Social Achievements

• Supported clients through various relief schemes for Covid-19 measures and support to clients affected by the tornado in the Czech Republic, the heavy flooding in Belgium and the hailstorm in Hungary.
• Awarded all employees an exceptional Covid-related bonus.
• Continued supporting projects with a positive social impact by promoting female entrepreneurship amongst others in the start-up community, by improving the general public knowledge on financial concepts and products and by bridging the digital skills gap.

Governance Achievements

• Inclusion of sustainability objectives in the criteria for senior and executive remuneration.
• Reinforced the internal knowledge and understanding of the interplay between climate-related factors and financial elements through a leadership development programme for senior management – dedicated specifically to climate change and low-carbon transition.
• Completion of responsible behaviour awareness training by the vast majority of staff in all countries.

Climate Goals & Targets

Environmental Challenges

• Covid-19 pandemic
• Extreme weather events (floods in Belgium and Germany, wildfires in Southern Europe, hailstorms in Hungary, tornado in Czech Republic)
• Insufficiently available climate-related data from many clients (especially private individuals and SMEs)
• Methodologies to map and steer the impact of credit, insurance and investment portfolios still in early stages of development
• Evolving regulations for financial institutions and economic sectors.

Mitigation Strategies

• Implemented various measures such as loan payment holidays to support clients impacted by the coronavirus.
• Swift and solution-driven response in handling insurance claims after devastating weather events.
• Launched a separate Sustainable Finance Programme for the management and reporting of climate-related risks and opportunities.
• Launched a Data and Metrics Project to improve data collection and reporting.
• Continuous monitoring of regulatory developments and adaptation of strategies accordingly.

Supply Chain Management

Supplier Audits: 3200 suppliers signed the Code of Conduct for Suppliers

Responsible Procurement

• KBC Supplier Code of Conduct
• Product-related environmental requirements
• Circular procurement solutions

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events, flooding

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Development of energy-efficient products and services
• Growth in sustainable finance

Reporting Standards

Frameworks Used: GRI Standards (Core option), SASB criteria

Certifications: ISO 14064-3 (reasonable assurance for environmental data)

Third-party Assurance: Vinçotte

UN Sustainable Development Goals

• SDG 3
• SDG 7
• SDG 8
• SDG 12
• SDG 13

KBC's initiatives contribute to these goals through its sustainable finance programs, employee well-being initiatives, community involvement, and responsible business practices.

Sustainable Products & Innovation

• Green bonds
• Green loans
• Sustainability-linked loans
• Eco-friendly payment cards

Awards & Recognition

• Best Disclosure award (International Awards for Climate-related Disclosures by Financial Institutions)
• Top Employers (Top Employers Institute)
• Bloomberg Gender Equality Index
• Various other awards in core countries

Environmental Metrics

ESG Focus Areas

• Environmental responsibility
• Financial literacy
• Entrepreneurship
• Health and longevity

Environmental Achievements

• Reached net-climate neutrality for our direct environmental footprint (2021)
• Reduced direct environmental footprint by 70% compared to 2015
• 100% renewable electricity consumption in 2022

Social Achievements

• Issued a €750 million social bond for investments in healthcare
• €7.4 billion financing contributing to social objectives
• Launched various employee well-being programs and initiatives

Governance Achievements

• Strengthened group-wide sustainability governance
• Linked executive compensation to ESG performance
• Established an External Sustainability Board

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions
• Data limitations for certain ESG metrics
• Balancing alarmism and complacency in sustainability efforts

Mitigation Strategies

• Developed alternative sourcing strategies
• Improved data collection methods
• Focused on quantitative data and realistic targets

Supply Chain Management

Supplier Audits: 3042 suppliers signed the Code of Conduct for suppliers in 2022

Responsible Procurement

• Sustainability Code of Conduct for Suppliers
• Environmentally friendly products and packaging
• Circular procurement models

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Flooding

Transition Risks

• Regulatory changes
• Market shifts
• Stranded assets

Opportunities

• Renewable energy investments
• Energy efficiency improvements
• Development of sustainable products

Reporting Standards

Frameworks Used: GRI Standards 2021, SASB criteria, TCFD

Certifications: ISO 14001 (Belgium), ISO 45001 (Belgium)

Third-party Assurance: PwC (limited assurance for target progress report and PRB self-assessment), Vinçotte (reasonable assurance for direct footprint calculations)

UN Sustainable Development Goals

• SDG 3
• SDG 7
• SDG 8
• SDG 12
• SDG 13

KBC's strategy and business solutions are linked to these SDGs through various initiatives.

Sustainable Products & Innovation

• Green bonds
• Social bonds
• Responsible Investing funds
• Energy Insights app
• ecoWise subsidiary

Awards & Recognition

• CDP 'A List'
• Terra Carta Seal
• Bloomberg Gender-Equality Index
• Various sustainability awards from Global Finance and World Finance

Environmental Metrics

ESG Focus Areas

• Environmental responsibility
• Financial literacy
• Entrepreneurship
• Health and longevity

Environmental Achievements

• 68% reduction in direct footprint compared to 2015 (target: 80% reduction by 2030)
• 100% renewable electricity consumption
• 0 euros direct exposure to thermal coal
• Second progress report on climate targets for lending portfolio shows that we are well on track in meeting our portfolio climate targets, with eight out of twelve of our targets being in line with our climate alignment benchmarks.
• Calculated for the first time the GHG emissions of part of KBC’s insurance underwriting portfolio.
• Continued to expand our focus to include the themes of biodiversity, circularity, pollution and water, and report on them. By extension, we also became an adopter of the TNFD recommendations.

Social Achievements

• Issued a second 750-million-euro social bond for investments in schools and hospitals
• 75% of employees participated in a new webinar on responsible behaviour
• Set an ambition to develop the skill sets and attitudes of young adults in Belgium with regard to mortgage loans and are continuing to act as a responsible lender.
• Improved the gender balance within our leadership
• 87% of parents successfully returned after parental leave thanks to the parents’ programme at ČSOB

Governance Achievements

• Established anti-corruption training for all employees
• Sustainability is integrated into our remuneration policy (at least 30% of variable remuneration for Executive Committee members and 10% for senior management is linked to sustainability performance)
• Launched a new reporting tool to protect whistleblowers

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions
• High consumer prices
• Data limitations or exclusions in ESG reporting, especially for climate-related data on our portfolios
• Uncertainties regarding the achievement of ‘1.5°C’ or ‘net-zero’ alignment
• Data availability for granular, climate-related data of our business portfolios

Mitigation Strategies

• Developed alternative sourcing strategies
• Implemented strict hierarchical validation in data gathering process
• Developed a dedicated sustainability strategy with strict governance and a KBC Sustainability Dashboard
• Continued to put our weight behind our existing CCCA commitment
• Invested in four main areas to expand our ESG data ecosystem: acquiring additional external data sources, implementing tools to calculate and report on relevant ESG metrics, introducing Artificial Intelligence techniques to gather and structure ESG data, and investing in the standardisation of data feeds across our group.

Supply Chain Management

Responsible Procurement

• KBC Group Code of Conduct for Suppliers
• ESG questionnaire for potential suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Floods
• Droughts

Transition Risks

• Regulatory changes
• Market shifts
• Stranded assets

Opportunities

• Financing renewable energy projects
• Sustainable building renovations
• Financing low-emission vehicles

Reporting Standards

Frameworks Used: GRI Standards 2021, SASB standards

Certifications: ISO 45001 (KBC Belgium, CBC, K&H, Shared Services Centers in Czech Republic and Bulgaria)

Third-party Assurance: PwC (limited assurance for target progress report and PRB self-assessment); Vinçotte (reasonable assurance for direct footprint calculations)

UN Sustainable Development Goals

• SDG 3
• SDG 7
• SDG 8
• SDG 12
• SDG 13

KBC's initiatives contribute to these goals through sustainable business solutions in the four focus areas: environmental responsibility, financial literacy, entrepreneurship, and health and longevity.

Sustainable Products & Innovation

• RI funds
• Social bonds
• Sustainability-linked loans
• Green bonds
• Products and services that support low-carbon or circular businesses

Awards & Recognition

• CDP A list for climate
• Sustainalytics negligible risk rating (9.8)
• S&P Dow Jones Indices score of 64
• MSCI AAA rating
• ISS ESG rating of C+ prime
• FTSE4Good score of 4.7
• Terra Carta Seal
• Euronext BEL®ESG stock market index inclusion
• Euromoney Awards for Excellence (Belgium’s Best Bank for ESG and CSR, Hungary’s Best Bank for ESG)
• PwC ESG Awards
• Top Employer certificate

Environmental Metrics

ESG Focus Areas

• Sustainability
• Digital Innovation
• Financial Education
• Responsible Business
• Employee Well-being
• Community Engagement

Environmental Achievements

• Reduced direct carbon footprint by 71% since 2015
• Reduced waste production by 63.5% since 2015
• Reduced electricity consumption by 34% since 2015
• Reduced water consumption by 40% since 2015
• Reduced paper consumption by 63.5% since 2015
• Provided CZK 29.6bn in loans supporting the transition to a low-carbon economy (CZK 2.1bn fully compliant with EU Taxonomy)
• Provided CZK 24.3bn in funding for buildings with EPC energy efficiency ratings A or B
• Financed CZK 1.6bn in clean-energy vehicles and Paris Agreement-compliant lorries
• Invested CZK 19.8bn in responsible investment (RI) funds, green bonds and ESG-linked investment certificates
• ČSOB Kampus and HQ building in Hradec Králové acquired LEED Platinum certification

Social Achievements

• Donated CZK 64 million to philanthropic causes and socially responsible activities
• Supported 701 students with bursaries and 618 with one-time grants through Fond vzdělání
• Provided CZK 1.3m in support through ČSOB Fond pomoci
• Supported 341 businesses under the Začínající podnikatelé program
• Supported 20 startups through Start it @ČSOB program
• Engaged 352 students in the Start it @UNI program
• Purchased CZK 70.6m worth of products and services from social enterprises
• Launched Green0meter joint venture to provide digital sustainability advice
• Provided financial literacy education to 74,397 pupils and students
• Launched Green Municipality of the Year competition
• Organised Green Challenge with 10 companies, accumulating 2,092,670 green kilometers

Governance Achievements

• Appointed an ombudsman to defend clients’ rights
• Implemented a qualified electronic signature (QES) for mortgage agreements, saving an average of 64 sheets of paper per mortgage
• Adheres strictly to all applicable laws and regulations, and voluntarily adopts additional rules and limitations in areas of ethics, transparency, and environmental protection
• Regularly reviews and updates internal policies

Climate Goals & Targets

Environmental Challenges

• Transition to a sustainable business model for some businesses
• Cybersecurity threats and fraud
• Addressing the needs of the sandwich generation and senior citizens

Mitigation Strategies

• Launched Green0meter joint venture to assist businesses in their transition
• Developed educational programs on financial and digital literacy to combat fraud
• Established Seniors’ Line and Neztratit se ve stáří portal to support senior citizens
• Offered various support programs for employees, including parents and senior employees

Supply Chain Management

Responsible Procurement

• Consideration of environmental impacts, social aspects, and sustainable development principles
• Preference for products and services that minimize environmental impacts
• Sustainability as a selection criterion in tenders
• Assessment of bidders as potential partners based on human rights, employment policies, anti-corruption measures, environmental aspects, carbon footprint reduction, ESG reporting, and certifications

Climate-Related Risks & Opportunities

UN Sustainable Development Goals

• SDG 3
• SDG 7
• SDG 8
• SDG 12
• SDG 13

ČSOB's initiatives contribute to these goals through various programs and services related to health, clean energy, economic growth, responsible consumption and production, and climate action.

Sustainable Products & Innovation

• Mortgage for energy-efficient housing
• Clean energy vehicle loan
• Investment in socially responsible investment funds
• Payment card made from recyclable plastic

Awards & Recognition

• Mastercard Bank of the Year 2023
• Global Finance: Best Bank for Sustainable Finance in the Czech Republic 2023
• TOP Responsible Company 2023
• Donors’ Forum Awards
• Fénix Content Marketing Awards
• Lemur Awards
• Czech Honey 2023 Gold medal
• LGBT+ Friendly Employer 2023