PKO Bank Polski Group Supports Poland’s Energy Transformation

2021.03.12

The PKO Bank Polski Capital Group supports energy transformation of Poland and reduces the negative impact of its operational activities on the environment.
The Group reduced the CO2 emission generated by its operational activities by 32% y/y and received white certificates for the first time in its history.
The bank takes into account ESG risk in the credit process for corporate clients and updated its credit policy for carbon-intensive sectors.
The Company holds a Renewable Energy Sources Policy, as part of which it increases its engagement in the RES financing.

The PKO Bank Polski Capital Group reduces the negative impact of its operational activities on the environment. In 2020, the Bank started including ESG risks in the credit process for corporate clients and updated its credit policy for carbon-intensive sectors. It also implemented the Renewable Energy Sources Policy, as part of which it concludes new RES financing transactions. At the beginning of 2021, it became the first participant of PKO Renewable Energy, i.e. a closed-end investment fund set up by PKO TFI. In 2020, the Group reduced CO2 emission generated by its operations by 32%, whereas in February 2021 it received white certificates for the first time in its history.

PKO Bank Polski has used the time of lower economic activity to support Poland’s energy transformation and to limit the Group’s negative impact on the natural environment. We reduced the CO2 emission generated by the Group’s companies, we implemented assessment within the scope of ESG for the credit process for corporate clients and we updated the credit policy for carbon-intensive sectors. At the beginning of 2021, PKO Bank Polski, together with PKO TFI, launched PKO Renewable Energy, i.e. a closed-end investment fund, where the Bank is ultimately going to invest up to PLN 500 million.

said Rafał Antczak, deputy president of the management board of PKO Bank Polski

ESG in PKO Bank Polski

PKO Bank Polski follows the ongoing climate changes caused by human activity and is aware of the liability encumbering companies as far as observance of the obligations resulting from the Paris Agreement is concerned. That is why in 2020, it launched the ESG project, the purpose of which is to monitor and to limit the negative impact of the Group’s operation on the environment. The Bank is reducing its direct impact on the environment and is aligning its credit policies for the individual sectors of economy to motivate its clients to behave likewise. It has also launched a dedicated website, where the interested persons can follow the Bank's current actions in the area of ESG.

Noticeable Drop in CO2 Emission in 2020

In 2020, PKO Bank Polski Capital Group limited the CO2 emission generated by its operational activities by as much as 32%. In 2019, direct emissions (as a result of consumption of fuels in vehicles and buildings) and indirect emissions (as a result of purchase of electricity and heat) amounted to 114.5 thousand tons of the CO2 equivalent. In 2020, the emission was reduced to 77.9 thousand tons of the carbon dioxide equivalent. In this period, the consumption of energy in the Group dropped by 7.8%; the greenhouse gas emission indices were also clearly reduced. In 2019, the Bank recorded emission of almost 11 kg of CO2 per client, whereas in 2020 it was only 7.5 kg of CO2.

This was the effect of accelerated digitization of the Group's operations, which allows for faster transition of client relations to the digital realm. The drop in emission was also greatly affected by the Bank’s procurement of certificates of origin for electricity from low-carbon sources. The certificates of origin refer to 73.3 GWh out of 81.5 GWh consumed in 2020. Modernisation projects aimed at improvement of energy efficiency have also contributed to the limitation of greenhouse gas emissions. For the performance of one of them, the Bank received white certificates for the first time in February 2021, which were sold via the Towarowa Giełda Energii.

Assessment of ESG Risk as Part of Credit Process

PKO Bank Polski also started to account for the ESG risks in the credit process for corporate clients. It implemented a mapping system for corporate clients, which first of all allows for an initial analysis of the ESG risks and subsequently an in-depth assessment of environmental risks resulting from operation of individual clients. The results of the ESG risk assessment are reflected in the credit materials and affect the terms of the credit decision that is made.

The ESG risk mapping system allows to identify projects that do not meet the increasingly higher environmental and social requirements. Thanks to it, the Bank can financially support environmentally sustainable and socially responsible projects, simultaneously improving the quality of its credit portfolio, as a client's ESG risk not recognised in time may become the Bank's credit risk.

Bank Open to RES Financing

The Group willingly finances RES investments. In 2020, it implemented the Renewable Energy Sources Policy, which meets the need to support the natural environment, to prevent global climate changes and to transform Poland’s economy towards zero emission. The purpose of the policy is a gradual increase in the Group's share in the RES financing. The policy sets out the preferred directions of development of the credit portfolio in the RES segment. In particular, it focuses on the financing of photovoltaic farm projects and windmills.

Apart from granting loans for the development of RES (bilateral and in consortia with other banks), PKO Bank Polski will also become engaged in such projects via its capital. To this aim, at the beginning of 2021, PKO TFI, in cooperation with the Bank, launched a new fund, PKO Renewable Energy - a closed-end investment fund. The Fund's investment policy foresees purchase and sale of companies whose core operation is generation, sale, transmission or storage of energy from photovoltaic power plants, wind plants or water plants located in the territory of Poland. The first participant of the fund will be PKO Bank Polski, which is ultimately planning to invest even up to PLN 500 million in the fund, and thus increase its share in the transformation of the energy sector.

Limited Financing for Carbon-Intensive Sectors

The Bank limits the financing for carbon-intensive sectors. At the end of 2019, the Bank’s balance sheet engagement related to industries determined as green amounted to 0.98% of the balance sheet total, thus only 0.52% engagement in carbon-intensive sectors. The Bank's credit policy, updated in 2020, introduced more rigorous criteria for the financing of the sector of carbon-intensive energy and covered a broader range of companies, including entities operating in coal-related industries. It also assumes lack of new engagements in the hard coal and brown coal mining sector. The consequence of its application is a gradual reduction of engagement in these sectors.

In the current credit policies, the Bank also adopted a strategy for reducing engagement in the case of activities covered by the EU Directive pertaining to plastic and a prudent approach to the petroleum and gas extraction industries or production of chemicals, chemical and rubber products. The prudent approach is reflected, among others, in recognition for fulfilment of environmental standards, impact on the environment and assessment of a business model within the scope of the sustainable business development concept.

The credit policy adopted with respect to the carbon-intensive industries is consistent and accounts for all aspects of their operation, without overlooking any elements of the chain of inter-dependencies of such industries. Its significant element is also the Bank’s engagement in energy transformation so that entities functioning in the carbon-intensive industries can improve their energy efficiency and enhance their energy mix by implementing low-emission and energy saving solutions.

More Products to Support Environmental Protection in the Bank’s Offer

PKO Bank Polski is also offering more and more products supporting environmental protection. Its offer includes thermal insulation loans for housing cooperatives and communities, or the Eco-loan for purchase and installation of photovoltaic panels. On the other hand, the Bank offers the BGK Biznesmax guarantees to its corporate clients, which may be used to hedge loans intended for pro-environmental investments.

The offer of the Group's companies also supports environmental protection. PKO Bank Polski, together with PKO Bank Hipoteczny, offer “green mortgage” where - based on the energy certificate for a real property - the clients may receive a lower margin of the “Własny Kąt” mortgage loan. PKO Leasing offers lease or dedicated loans to entrepreneurs to finance photovoltaic devices, whereas the offer of PKO TFI features an investment fund “PKO Ekologii i Odpowiedzialności Społecznej Globalny.”

The Bank's Capital Group is also active within the scope of procuring “green” financing from the market. In 2019, PKO Bank Hipoteczny was the first mortgage bank in Poland to issue green covered bonds. On the other hand, PKO Bank Polski has experience in issuing green bonds for the State Treasury.

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PKO Bank Polski is the indisputable leader at the Polish banking sector. After three quarters of 2020, its’ consolidated net profit amounted to PLN 2.02 billion and the value of assets PLN 377 billion. The Bank is the basic supplier of financial services for all segments of clients, having highest shares at the market of deposits (18.4%), credit (17.6%), lease (11.2%) and investment funds for natural persons (22.2%). Having over 9.55 million pay cards, the Bank is the largest issuer of debit and credit cards in Poland. Thanks to the development of digital tools, including IKO, which has been activated almost 5 million times by the end of the third quarter of 2020, PKO Bank Polski has become the most mobile bank in Poland. The Capital Group companies reinforce the Bank’s strong position. PKO Bank Polski Brokerage House is the leader with respect to the number and the value of IPO and SPO transactions on the capital market.

Szymon Pinderak

Press Center

prasa@pkobp.pl

+48 22 521 53 85

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