EU taxonomy

Pursuant to Article 10(3) of Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021. (hereinafter: Delegated Regulation) in conjunction with Article 8(1) of Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 (hereinafter: Taxonomy), the Bank Group is required to disclose, for the period from 1 January 2022 to 31 December 2023, the percentage of exposures to Taxonomy-non-eligible economic activity and Taxonomy-eligible economic activity in its total assets.

Taxonomy-eligible economic activity means the activity described in Annexes I and II of Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021. (hereinafter: Climate Regulation), regardless of whether such economic activity meets any technical criteria indicated therein.

Disclosures on Taxonomy-eligible exposures should be based on the latest available data of the Bank Group’s clients that are subject to the obligation to publish non-financial information under Article 19a or 29a of Directive 2013/34/EU (the national implementation of the Directive was made in the Accounting Act of 29 September 1994).

Since at the time of publication of this report (21 February 2022) there were no available client non-financial reports which should form the basis for the disclosures, the Bank Group – as part of voluntary disclosures – made its own estimates based on internal data and surveys sent out to clients.

Based on these estimates, we estimated that as at 31 December 2021, for companies subject to the obligation to publish non-financial information in accordance with Article 19a or 29a of Directive 2013/34/EU:

• The percentage of exposures to Taxonomy-eligible activities in the Bank Group’s total assets is 1.33%,
• The percentage of exposures to Taxonomy-non-eligible activities in the Bank Group’s total assets is 0.86%,

In addition, as at 31 December 2021:

• The on-balance sheet exposure to central governments, central banks and supranational issuers as a percentage of the Bank Group’s total assets was 19.13%.
• The percentage of on-balance sheet exposures on account of derivatives in the Bank Group’s total assets was 0.1%.
• The percentage of on-balance sheet exposures to non-financial corporations not required to publish non-financial information in accordance with Article 19a or 29a of Directive 2013/34/EU in the Bank Group’s total assets was 16.54%.
• The percentage of trading portfolios and on-demand interbank loans in the Bank Group’s total assets was 0.17%.

The above indicators have not been audited and are prepared to the best of the Bank Group’s knowledge.

The Taxonomy regulations are currently under intensive development and detailing. Due to the fact that 2022 is the first time that the reports required by the Taxonomy are produced, and this has major impact on the availability of the required data, at the time of publication of the report (21 February 2022) the Bank is in the process of implementing the requirements following from Regulation (EU) 2020/852 into its business strategy, product design processes and cooperation with clients and business partners.

Due to the lack of uniform interpretation of the EU regulations regarding the concept of „total assets” included in the disclosure under the Taxonomy, it has been assumed that it includes on-balance sheet exposures in accordance with the scope of prudential consolidation for the types of assets indicated in Regulation No 575/2013 of 26 June 2013 (hereinafter: CRR).

In the voluntary disclosure regarding the percentage of exposures to Taxonomy-eligible activities in the Bank Group’s total assets and the percentage of exposures to Taxonomy-non-eligible activities in the Bank Group’s total assets, as well as in the disclosure regarding the percentage of exposures to companies that are not required to publish non-financial information, only on-balance sheet exposures to business entities that are non-financial corporations were taken into consideration. Exposures to households, including mortgage-backed, were not taken into account.

In order to determine the group of clients that are subject to the obligation to publish non-financial information, for the Bank Group’s clients that are non-financial corporations, internal data were analyzed in terms of the criteria indicated in the Accounting Act, including: sales revenues, assets and number of employees, as well as the legal form of the business. The sources of information analyzed included: latest available standalone annual financial statements and internal information obtained in the course of cooperation with clients.

Based on the data selection process, the Group identified and sent a survey to the group of clients potentially obligated to publish non-financial information. The purpose of the survey was to obtain information on whether the given entity is subject to a non-financial reporting obligation and, if so, whether its activities can be considered Taxonomy-eligible and what percentage of its sales revenue is generated by such activities.

If, in the survey, the client provided information on the percentage of its sales revenue from Taxonomy-eligible activities, that client’s exposure to the Bank Group is included in the calculation of the Taxonomy eligibility and non-eligibility ratios as Taxonomy-eligible activities in the percentage provided, and the remainder as Taxonomy-non-eligible activities. If the survey did not provide an answer regarding the percentage of revenue from Taxonomy-eligible activity, it was assumed for the calculation of the ratios that 100% of that client’s exposure to the Bank Group is Taxonomy-eligible.