Slide 1: ESG Investor Presentation
ESG Investor Presentation Euronext Sustainability Week 2023 5 September 2023
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Banco BPM ("Banco BPM"); for the purposes of this notice, "presentation" means this document, any oral presentation, any question and answer session and any written or oral material discussed following the distribution of this document. The distribut
Slide 3: Agenda
Agenda 1 ESG at Banco BPM: Highlights 4 2 Governance 11 3 Strategic Plan 2021-2024: ESG as key foundation stone of the plan 17 4 2022 ESG Results: Facts & Figures 22 Appendix 40 3
Slide 4: ESG at Banco BPM: Highlights
ESG at Banco BPM: Highlights 1
Slide 5: Our path towards a sound sustainability strategy: the recent history
Our path towards a sound sustainability strategy: the recent history 2018-2020 2021 2022 • Internal Control and Risk Committee1 in • Activation of the “ESG Action Plan” to fully • Sound progress in the ESG strategy and charge of overseeing sustainability topics integrate ESG into our operating model
Slide 6: Our path towards a sound sustainability strategy: latest achievements
Our path towards a sound sustainability strategy: latest achievements 2023 • 5 priority sectors already identified: • Communication of targets within 18 months In March 2023 o oil & gas o power generation Banco BPM joined o cement the NZBA o automotive o coal ESG governance further strenghtened: • C
Slide 7: ESG integration update: strong results in the main ESG KPIs
ESG integration update: strong results in the main ESG KPIs 2021 2022 H1 2023 % of Green new lending to corporate and enterprise segments1 n.a. 55.6% 55.8% Green residential mortgages (new lending) €700m €620m €178m Green & Social Bonds issued €0.5bn €2.05bn2 €1.5bn BUSINESS Share of ESG corporate b
Slide 8: ESG Governance and Accountability: important goals achieved
ESG Governance and Accountability: important goals achieved ESG TARGETS INCLUDED IN SHORT-TERM & LONG-TERM INCENTIVE PLANS INTEGRATED ESG GOVERNANCE FOR CEO & MANAGEMENT SINCE 2021 Targets coherent with Strategic Plan and with those monitored at RAF level by Risk Management Responsibile for ESG stra
Slide 9: Recognition of our efforts: Banco BPM #1 Green bond issuer among Italian banks in 2022
Recognition of our efforts: Banco BPM #1 Green bond issuer among Italian banks in 2022 SIGNIFICANT ISSUANCE ACTIVITY OF SOCIAL & GREEN BONDS: • €4.05bn Social & Green bonds issued in the period 2021-Jun. 2023 (o/w €3.75bn under the Green Social & Sustainability Bonds Framework), already above the ta
Slide 10: Recognition of our efforts: sound ESG Ratings and index inclusion
Recognition of our efforts: sound ESG Ratings and inclusion in the FTSE MIB ESG index & in the Bloomberg G-E Index Governance Quality Score CCC B BB BBB A AA AAA 10 9 8 7 6 5 4 3 2 1 Confirmed at top level 1 in Dec. 2022 Upgraded from BBB to A in Mar. 2023 Worst Scale Best 0 56 100 40+ 40 30 22.4 20
Slide 11: Governance
Governance IESG &
Slide 12: New composition of the main corporate bodies following the Shareholders' Meeting of April 2023
New composition of the main corporate bodies following the Shareholders’ Meeting of April 20231 DIRECTORS DIVIDED BY AREA OF EXPERTISE # Composition of the BoD: 15 members ESG/social and environmental sustainability 10 Financial and/or banking markets 15 Non-Independent 13% Including Men 60% Banking
Slide 13: ESG Governance bodies and ESG corporate function
ESG Governance bodies and ESG corporate function A thorough and integrated governance for a flawless ESG strategy BOARD OF DIRECTORS Defines the policies regarding non-financial disclosure, the social and environmental policies and approves the Consolidated ESG activities of the BoD in 2022 Non-Fina
Slide 14: Key policies and business conduct data
Key policies and business conduct data Our Policies GOVERNANCE AND BUSINESS CONDUCT ENVIRONMENT, HEALTH & SAFETY and HUMAN RIGHTS (All documents published on Banco (All documents published on Banco BPM’s website) Key Business Conduct data BPM’s website) in 2022 1. Guidelines regarding the management
Slide 15: ESG targets integrated in Short & Long-Term incentive plans for CEO & Top Management
ESG targets integrated in Short & Long-Term incentive plans for CEO & Top Management since 2021 TARGETS COHERENT WITH THOSE DEFINED IN THE STRATEGIC PLAN AND WITH THOSE MONITORED AT RAF LEVEL BY RISK MANAGEMENT SHORT-TERM • Between 40% and • Limit of 1:1 for the ratio between the variable and fixed
Slide 16: Understanding material sustainability factors and ESG strategic roadmap impacts
Understanding material sustainability factors and ESG strategic roadmap impacts THE MATERIALITY MATRIX • To respond to the logic of the new standard GRI, we have identified the aspects on which we generate the most significant impacts on the economy, environment and people, including on their human
Slide 17: Strategic Plan 2021-2024: ESG as key foundation stone of the Plan
Strategic Plan 2021-2024: ESG as key foundation stone 3 of the Plan THE PILLARS OF OUR ESG STRATEGY
Slide 18: The ESG pillars of Strategic Plan 2021-2024: Business and Risk & Credit
The ESG pillars of Strategic Plan 2021-2024: Business and Risk & Credit BUSINESS STATUS AS AT 2022 2024 TARGET • Share of new lending to green/low transition risk sectors1 55.6% > 65% Strengthening of our ESG commercial offering with dedicated • BBPM Green residential mortgages (cumulated new lendin
Slide 19: The ESG pillars of Strategic Plan 2021-2024: People
The ESG pillars of Strategic Plan 2021-2024: People PEOPLE STRATEGY STATUS AS AT 2022 2024 TARGET • Management incentive schemes to include a selected number of KPIs connected to the different • Share of women in managerial positions1 26.1% > 30% responsibility/unit/role, extended to a wider group o
Slide 20: The ESG pillars of Strategic Plan 2021-2024: Environment and Community
The ESG pillars of Strategic Plan 2021-2024: Environment and Community ENVIRONMENT STATUS AS AT 2022 2024 TARGET To improve to -30% by 2030 Reducing consumption and CO2 • Total1 direct & indirect energy consumption (Giga Joule) 571K 588K emissions with the aim of achieving -20% vs. 2019 carbon neutr
Slide 21: Strategic Plan 2021-2024: Digital-driven service model
Strategic Plan 2021-2024: Digital-driven service model Key initiatives 2021-2024 IT Investments Main digital achievements & KPI ➢ DATA & ANALYTICS # Branch and +180% Using data to empower decisions APP-based -42% … o/w • Evolve the Data architecture and adopt transactions 4 digital-related Branch AP
Slide 22: 2022 ESG Results: Facts & Figures
2022 ESG Results: Facts & Figures • Business • Risk & Credit 4 • People • Environment • Community
Slide 23: Business – our ESG approach in a nutshell
Business – our ESG approach in a nutshell 1 Material support to Italian economy, thanks to a business model focused on Households & SMEs 2 Concrete achievements in the ESG integration into our commercial and business model 3 Growing offering of “Green” loan products and SLLs 4 Significant developmen
Slide 24: Material support to Italian economy thanks to a business model focused on Households & SMEs
1 Material support to Italian economy thanks to a business model focused on Households & SMEs Client base as at 31/12/2022 Stock of Performing customer loans as at 31/12/2022 (GBV) Other (Public Sector, No- Geographic breakdown4 >3.8m clients, with the core segments Profit, etc.) GACS Senior Notes 7
Slide 25: Concrete achievements in the ESG integration into our commercial and business model
2 Concrete achievements in the ESG integration into our commercial and business model Lending with environmental features Lending with social features 2022 KEY ACHIEVEMENTS IN WM & CIB: €10.9bn «Green» new lending in 2022 o/w: • €20.7bn stock of AUM third party products • New lending to third sector
Slide 26: Growing offering of “Green” loan products and SLLs
3 Growing offering of “Green” loan products and SLLs NEW PRODUCTS DEVELOPED IN 2022 Financing of Loans with SACE Loans with Sustainability Green Loans with Green Green Residential Renewable Green Guarantee Target “Obiettivo Sostenibilità” Real Estate Transition Target Mortgages Energy Sources Green
Slide 27: Significant development of digital banking
4 Significant development of digital banking… Digital adoption: continuing growth Key 2022 initiatives • 50% OF TOTAL SALES ALREADY DRIVEN BY ADVANCED 85.8% Remote transactions - Households ANALYTICS / OMNICHANNEL CUSTOMER JOURNEYS Web + ATM transactions, alternatives to • NEW VALUE ADDED SERVICES D
Slide 28: Strong safeguard of Business Continuity, Cybersecurity and Privacy
4 …coupled with strong safeguard of Business Continuity, Cybersecurity and Privacy DATA 0 serious IT security GOVERNANCE AND IT SECURITY BUSINESS CONTINUITY, PRIVACY Protection of the 0 losses of data or incidents Data and information CYBERSECURITY information assets of unauthorised access in 20221
Slide 29: Risk & Credits – our ESG approach in a nutshell
Risk & Credits – our ESG approach in a nutshell 1 Progress in ESG-oriented lending policies 2 Progress in the integration of ESG into Risk Management 3 Portfolio transparency: Transition, Physical and Environmental risks 29
Slide 30: Progress in ESG-oriented lending policies
1 Progress in ESG-oriented lending policies ESG oriented lending policies in 2022 SPECIFIC APPROACH Upgrade of ESG lending policies already FOR REAL ESTATE EVALUATION OF ESG AND CLIMATE CHANGE RISKS INTEGRATED WITHIN SECTOR TO EVALUATE THE ENVIRONMENTAL approved in 2022, to be implemented in 2023 LE
Slide 31: Progress in the integration of ESG into Risk Management
2 Progress in the integration of ESG into Risk Management Risk Identification Measurement and Management of Climate & Environmental risks • Confirmed CREDIT RISK TRANSITION RISK IMPACTS IDENTIFIED: Estimated the impact on PD & LGD → first also in 2022 • “C&E” risk scoring calculated for Credit Risk,
Slide 32: Portfolio transparency: Transition Risk
3 Portfolio transparency: Transition Risk Methodology TRANSITION RISK (Loans to NFCs) • Micro-sectorial analysis (NACE GBV as at 31/12/2022 classification), aimed at providing an High risk exposures: IN % ON TOTAL HIGH • include sectors whose HIGH GBV, in € M LOANS TO NFCs indication of the transiti
Slide 33: Portfolio transparency: Physical Risk
3 Portfolio transparency: Physical Risk Methodology PHYSICAL RISKS Collateral values underlying exposures towards Households and NFCs GBV as at 31/12/2022 • The analysis considers the RE collateral underlying exposures towards Households and NFCs and the productive assets of NFC clients: ACUTE CHRON
Slide 34: Portfolio transparency: Environmental Risks
3 Portfolio transparency: Environmental Risks Methodology • Initial exercise aimed at measuring the exposure of our loan portfolio towards NFC clients with respect to environmental risks performed in 2022 • The variables of environmental risk considered are consistent with the EU taxonomy • The meth
Slide 35: People – Composition of Group employees, inclusion & diversity and new hires
People – Composition of Group employees, inclusion & diversity and new hires Key figures New hires and turnover in 2022 Share of Women in 369 total hires managerial positions1 20.8% 23.4% 26.1% Up at # 475, 47% Women +15% Y/Y 790 exits • Women in (62% related to managerial 2020 2021 2022 positions:
Slide 36: People – Training, Safety, Work-Life Balance and Wellbeing
People – Training, Safety, Work-Life Balance and Wellbeing Training & people development programs Safety management TRAINING IN TRAINING HOURS 2021 2022 % Chg. 2021 2022 % Chg. Amount invested in training HEALTH & SAFETY Total training hours 1,019,725 1,101,976 8.1% Total training hours 45,343 48,89
Slide 37: Environment – Keep on reducing our own impact
Environment – Keep on reducing our own impact Key figures Energy consumption (GJ % Chg. % Chg. 2020 2021 2022 100% -8,8% in ‘000) vs. 2021 vs. 2020 Avoided Of natural gas, diesel emissions for 1 174.6 176.2 148.6 -15.7% -14.9% oil and gasoline Consumption of Of electric energy 402.1 393.2 355.6 -9.6
Slide 38: Communities – Our contribution to the sustainable development of local territory
Communities – Our contribution to the sustainable development of local territory >€4.6m donations and sponsorship Corporate volunteering, ESG awareness for social and environmental projects In addition, €0.9m collected and financial education: >14,500 hours from fundraising and donated (+€0.9m vs. 2
Slide 39: Communities – Responsible management of the Supply chain
Communities – Responsible management of the Supply chain Key 2022 figures ESG integration • Request of Quality, Environmental and Energy Certifications1 for a better screening of our suppliers 1,535 suppliers €817m value of • All suppliers must certify that they: • know the Model of organization, ma
Slide 40: Appendix
Appendix • Green, Social and Sustainability Bonds Framework
Slide 41: Green, Social and Sustainability Bonds Framework published in July 2021
Green, Social and Sustainability Bonds Framework published in July 2021 GREEN, SOCIAL AND SUSTAINABILITY BONDS FRAMEWORK: ▪ Aligned with the ICMA Principles 2021 ▪ Positive Second Party Opinion released by ISS • The development of a Green, Social and Sustainability Bonds Framework is fully complemen
Slide 42: Green, Social and Sustainability Bonds Framework: Detailed description
Green, Social and Sustainability Bonds Framework: Detailed description USE OF PROJECT EVALUATION MANAGEMENT OF REPORTING PROCEEDS & SELECTION PROCEEDS • New and existing financings • Appointed ESG Funding Implementation on internal • • Annual allocation and belonging to the following Working Group i
Slide 43: Green, Social and Sustainability Bonds Framework: Total Eligible Assets
Green, Social and Sustainability Bonds Framework: Total Eligible Assets Data as at 30/04/2023, in € m Eligible Social Loans The total amount of eligible assets under the Eligible Portfolios current Green, Social & Sustainability Bonds Eligible Third and Green Public Sector; SME(PMI) - Framework amou
Slide 44: Contacts for Investors and Financial Analysts
Contacts for Investors and Financial Analysts Roberto Peronaglio Banco BPM +39 02 9477.2090 Registered Offices: Piazza Meda 4, I-20121 Milano, Italy Tom Lucassen +39 045 867.5537 Corporate Offices: Piazza Nogara 2, I-37121 Verona, Italy Arne Riscassi +39 02 9477.2091 Silvia Leoni +39 045 867.5613 in