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Environmental

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Due to the nature of business activities, the direct environmental impact of the bank and the group is limited to consumption of natural resources. Indirect impact on the environment concerns financing granted to business and public entities, as well as the group's product offer.
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PKO Annual
Report Online
2020

Direct environmental impact

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The direct impact on the environment depends on how limited natural resources are used. The Group monitors the consumption of such resources and engages in activities aimed at reducing their consumption. [303-1v16] For the purposes of this report, we have attempted to estimate the group’s water consumption. The water consumption at the bank in 2020 was approx. 260 mega litres. In the remaining entities of the group, water consumption amounted to 27.6 mega litres.

The group entities have procedures and structures to track environmental legal changes relevant to their operations. In 2020, none of the group’s entities carried out a project that could have a significant impact on the environment. [307-1] There were no administrative proceedings in the group related to the breach of environmental protection regulations, which resulted in the imposition of financial penalties.

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One of the bank’s strategic goals is to simplify and streamline processes by reducing paper documentation.

In 2020, the bank continued the implementation of the SMARTOP project whose strategic focus is on digitization of sales and service processes. There were also changes in the processes related to the partial transition to remote work, which translated into a significant reduction in the amount of paper consumed by the bank.

The bank also made available to customers the possibility of submitting further instructions in the iPKO internet banking service in 2020 (thus far they could be submitted in outlets and through the Contact Center). Customers submitted over 2.5 times more orders in remote channels than in the total of 2018-2019. At the same time, the bank was working on the digitization of processes in the branch, including remote contacts between employees and the bank’s customers. This also translated into a decrease in paper consumption.

26%
Decrease in paper consumption y/y
58%
Decrease in A4 paper consumption in the last 4 years

In 2020, the bank had an agreement with its existing service provider for non-municipal waste collection. The contractor is ISO 9001: 2015 and 14001: 2005 certified. The contractor transfers the waste received from the bank to other companies for management and utilization, in accordance with applicable regulations. [306-2] Hazardous electrical and electronic waste is handed over by the bank to a specialized company that processes and recycles it (100%). Paper records are similarly collected by a specialized shredding company. In addition, in 2020, the entities of the group conducted selective collection of municipal waste. The bank implemented municipal waste segregation in 726 locations (64% of all).

Non-municipal waste produced by the bank (in tonnes):

2020 2019 y/y
Total 736 843 -13%
hazardous1) 15 16 -6%
other, including: 721 827 -13%
bulky waste 261 532 -51%
electronic and electric 243 136 79%
magnetic and optical data carriers 1 2 -50%
paper and cardboard waste (binders) 37 4 825%
iron and steel waste 179 152 18%
1) Electric and electronic appliances such as air conditioners, used monitors and refrigerators.

The bank has been implementing Flexidesk project whose purpose is to create a new working environment and allow hybrid work by adjusting the office space available in the bank’s real estate portfolio. The planned work should result in optimization of the bank’s office space.

In 2018, the bank adopted a Spatial Arrangement and Fitting Standard for the sales position, and in mid-2020 for other positions. The standard defines the solutions and technologies used in creating new workstations and in modernizing the existing ones. Many of the solutions that has been adopted have a positive effect on the environment:

  • reduced demand for office space,
  • requirement to sort waste into fractions,
  • reducing the number of documentation cabinets as a result of reducing the flow of paper documentation (partly due to the digitization processes executed at the bank such as for example the Electronic Office project),
  • introduction of indoor plants,
  • using ventilation and air-conditioning installations with energy recovery in the buildings,
  • installation of water dispensers connected to the water supply and the resulting reduction of purchases and consumption of plastics,
  • using LED lighting,
  • increased use of natural materials,
  • installation of showers for persons using bikes to commute to work.

Other actions taken in 2020:

Mitigating adverse impacts on the environment
Transport lacing bicycle stands and arranging changing rooms for the employees in the bank’s locations
EKO-driving training for the employees (safe and efficient use of cars – both company and private)
Waste Gradual implementation of municipal waste sorting in the bank’s locations
Plastics Elimination of the use of plastic items, e.g. replacement of disposable plastic cups for drinking water from water dispensers installed in the bank’s facilities with BIO cups, discontinuation of purchase of plastic plates and cutlery, reducing the consumption of plastic mechanisms for rubber self-inking stamps (approx. 1 700 pieces)
Replacement of bottled spring water dispensers with point of use dispensers with filters connected to the water supply (the number of gallon bottles ordered in 2020 was by more than 2,500 lower than in the previous year)
Paper Reducing the paper correspondence sent (centralized correspondence by approx. 7% and non-centralized correspondence by 23%)
Text messages in place of paper correspondence
Printing on EKO paper (approx. 2.1 million envelopes and approx. 2.9 million A4 sheets)
Data Extension of the bank’s real estate management system by adding environmental data aggregation, including information on media consumption (for the purpose of calculating the carbon footprint) and other information about the building (e.g. about waste sorting)
Training How to be green? – what to do to reduce the adverse effect of daily activities at work and home on the environment

Consumption of energy and fuels

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In September 2020, the bank obtained the guarantees of origin of electricity from a low-emission source for the first time. The obtained guarantees covered electricity produced in highly efficient cogeneration units fired with natural gas. Such guarantees of origin of electricity certify to the end user that the amount of electricity in the distribution network or transmission network specified in the document was generated in highly-efficient cogeneration.

In 2020, the bank made a comprehensive estimate of energy and fuel consumption, as well as performed its carbon footprint calculations for the second time. The calculations for energy and fuel consumption covered 100% of the space and transport used. [302-4] Total energy consumption by the group in 2020 decreased by 7.5%, and by the bank by 7.8% compared to 2019. The group bought electricity and heat, it did not purchase technological steam or cooling. Most of the purchased energy came from non-renewable sources. In the bank, the largest decrease was related to the consumption of heating oil (by more than a half). The reason behind it was the termination of operations in four locations where fuel oil was the source for heating, and the change in the method of heat supply in other four locations (replacement of oil furnaces with heating from the network or gas furnaces). The bank also reduced consumption of gasoline and diesel fuel in company vehicles.

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Energy consumption within the PKO Bank Polski Group (in MWh):

Bank Othe entities Group Bank Other entities Group y/y
2020 2019 (after recalculation)
Fuel used in buildings: 22,803 3,864 26,667 24,122 3,095 27,216 -2.0%
natural gas 20,866 3,732 24,598 20,465 2,940 23,405 5.1%
heating oil 1,672 94 1,767 3,368 132 3,500 -49.5%
diesel oil 94 4 98 81 17 98 -0.7%
LPG 0 34 34 0 6 6 501.1%
coal 171 0 171 208 0 208 -17.5%
Fuel used in vehicles: 18,400 10,180 28,580 28,697 9,903 38,600 -26.0%
diesel oil 815 4,479 5,295 1,211 4,093 5,304 -0.2%
gasoline 17,585 5,701 23,285 27,486 5,810 33,296 -30.1%
Energy purchased: 148,506 17,043 165,548 152,853 20,051 172,904 -4.3%
electricity 81,547 10,291 91,838 84,079 11,112 95,191 -3.5%
heat 66,959 6,752 73,711 68,774 8,939 77,713 -5.1%
Total energy consumption 189,709 31,087 220,796 205,671 33,048 238,720 -7.5%

Energy consumption intensity within the PKO Bank Polski Group:

Indicator Unit 2020 2019 y/y
Total energy consumption per employee MWh / person 8.4 8.5 -1.0%
Total energy consumption per PLN 1 mln assets MWh / PLN 1 mln assets 585.7 686.2 -14.6%
In previous years, a number of group entities performed an energy audit. Based on the results of the audit, the group entities identified the areas with the greatest energy-saving potential and action plans that are now being successively implemented.

[302-4] The bank continues its efforts to implement the Energy Management System in accordance with ISO 50001 in order to optimize energy consumption, introduce a single energy consumption control system and intensify the actions aimed at reducing the consumption of energy carriers. The bank reviewed and analysed the possible actions that may be taken in order to reduce CO2 emissions as much as possible and selected the following tasks to be performed in the coming years:

  • purchase of electricity from low-emission and zero-emission sources,
  • commencement of the shift to the purchase of electricity directly from renewable sources,
  • development of the assumptions and plan for the implementation of the Energy Management System consistent with ISO50001 in the years 2021-2022,
  • commencement of the installation of PV systems in the bank’s properties – the first installations are planned for the year 2021.

The main results of the activities relating to energy consumption in 2020 include:

  • performing a gap analysis for the Energy Management System consistent with ISO50001,
  • purchase of 73.3 GWh of energy generated in highly efficient cogeneration units with guarantees of origin,
  • continuing the replacement of lighting with LED lighting,
  • ongoing design optimization during modernizations and investments.

In 2020, the bank obtained first energy savings resulting from the modernization of one of the biggest cooling installations serving the computational centre and modernization of the heating node in its headquarters building. These projects resulted in annual energy savings of 197.25 toe (2,294 MWh).

-7.5% y/y
Reduction in energy consumption by the group
-32% y/y
Reduction of the group's direct emissions of CO2

Greenhouse gas emissions

Since 2019, we have been monitoring greenhouse gas emissions resulting from the group’s operating activities. In 2020, we recalculated the base year (2019) due to the provision of more accurate data for several locations and the finding that some utilities were underestimated in the consumption of natural gas and heat for subsidiaries.

The boundaries of the reported emissions include: (1) for data for a bank, only this entity (100% of the issue), (2) for data for the group: the bank and all of the bank’s subsidiaries according to operational control (100% of the issue of each unit). Reported emissions cover Scope 1 and Scope 2. Scope 3 emissions cover domestic business trips of the bank’s representatives, which have been monitored since 2020.

 

Reported emissions were calculated in accordance with the Greenhouse Gas Protocol (GHG) Corporate Accounting and Reporting Standard in the revised version of the market-based method. As a result of the performed calculations, the bank achieved the data reliability ratio (percentage of data obtained from sources against all data used for calculations, which include data obtained from sources and estimated data) at the level defined as good in the GHG Protocol methodology.

To ensure comparability with the market, the bank calculated greenhouse gas intensity indicators. For the calculation, the bank used the total issues in Scope 1 + 2 for the bank’s group. In this way, the bank obtained a complete picture of the carbon footprint in its operating activities.

Access report: Greenhouse gas emissions inventory of PKO Bank Polski for 2020

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Scope 1:
13 509 Mg CO2e

Group’s direct emissions resulting from
burning of fuels in owned or controlled sources

Scope 2:
64 377 Mg CO2e

Group’s indirect emissions resulting from  the use of purchased electricity and heating

Scope 3:
289 Mg CO2e

Bank’s indirect emissions resulting
from domestic business trips

In 2020, the group’s greenhouse gas emissions under Scope 1-3 amounted to 78.2 thousand Mg CO2e (tonnes of carbon dioxide equivalent), of which 84.4% was attributable to the parent company. Most of the group’s emissions (82.3%) fell under Scope 2. Scope 2 emissions (calculated according to the market-based method) came from purchased electricity in 60.3% and the rest from purchased heat. The structure of the issue was very similar in the case of the parent company. The largest decrease in emissions in 2020 was recorded by the group in Scope 2 due to emissions from purchased electricity. The high reduction of greenhouse gas emissions in this respect is mainly due to the bank’s obtaining a guarantee of electricity origin from a low-emission source (high-efficiency cogeneration). The guarantees of origin covered 73.3 GWh of energy out of more than 81.5 GWh consumed by the bank in 2020.

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Direct and indirect emissions by source (in MgCO2e):

Bank Other entities Group Bank Other entities Group Group
2020 2019 (after recalculation) y/y
Scope 1 – direct emissions from: 10,106 3,403 13,509 11,816 3,671 15,487 -12.8%
fules used in buildings 4,761 790 5,551 5,185 638 5,823 -4.7%
fuels used in vehicles 4,562 2,613 7,175 6,631 3,033 9,664 -25.8%
fugitive sources 783 – 783 – – – –
Scope 2 – indirect emissions from: 55,595 8,782 64,377 88,906 10,104 99,010 -35.0%
purchase of electricity 32,333 6,492 38,825 64,320 7,008 71,329 -45.6%
purchase of heat 23,262 2,290 25,551 24,585 3,096 27,681 -7.7%
Total emissions (Scope 1 + 2) 65,701 12,185 77,886 100,721 13,775 114,497 -32.0%
Scope 3 – indirect emisssions (domestic business trips) 289 – 289 – – – –
Total emissions (Scope 1 + 2 + 3) 65,989 12,185 78,175 – – – –

GHG emissions intensity indicators:

GHG emissions (Scope 1 + 2) Unit 2020 2019 y/y
per employee Mg CO2e / person 3.0 4.1 -27.2%
per client kg CO2e / person 7.4 11.0 -32.2%
per PLN 1 mln assets kg CO2e / PLN 1 mln assets 204.0 329.1 -38.0%

Indirect impact on the environment

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The extended environmental responsibility of the PKO Bank Polski Group includes for instance the policy of financing the activities of business and public entities. The bank has been undertaking initiatives that target environmental protection for years. This applies to several areas of activity:

1. Together with other entities of the group, the bank supports the development of the economy by financing investments in new technologies, the modernization of technological lines and energy-saving projects.

2. The bank influences the attitudes of customers by participating in the financing of pro-ecological projects, including the construction of waste incineration plants, sewage treatment plants and power generation systems using modern, pro-ecological technologies.

3. For many years, the bank has been actively involved in cooperation with local government units (LGUs), including through the financing of projects relating to environmental protection or the pro-environmental modernization of public service facilities.

4. In the assessment of creditworthiness, the bank takes into account the impact of the particular business activities on the environment, compliance with the formal and legal requirements regarding environmental permits, geographical and environmental conditions etc. In the assessment of the business models of borrowers and identification of risks (including ESG risks), the bank takes into account the sustainable business development concept and the possible benefits for the local community and the natural environment.

5. In the process of analysing property valuations, the bank assesses the environmental risks that could arise in the event of using the property for the purposes of activities causing contamination or devastation of the environment, including in particular: emission of dust, pollution of water, disposal of sewage, storage or production of toxic, inflammable, or explosive materials.

6. The bank finances the transformation of the Polish power sector. The transformation areas include not only zero emission or low emission energy sources, but also improvement of the energy efficiency of entities that consume big quantities of energy for the purposes of their production processes and modernization of the transmission network.

Sectoral policies

In 2020, the bank adopted a new Policy for Renewable Energy Sources, which was then implemented throughout in the entire group. Our motivation for adopting the new policy is to support the natural environment, prevent global climate change and engage in the transformation of the Polish economy towards zero emissions.

The aim of the policy is to gradually increase the share of the group’s entities in financing renewable energy sources. The policy defines the preferred directions of development of the loan portfolio in the renewable energy segment. It is focused in particular on the financing of photovoltaic farm and wind turbine projects (in particular, the projects that have won renewable energy auctions and guarantee stable cash flows from operating activities). However, other projects can also receive financing based on individual decisions. Project assessments performed by the bank include the analysis of the following issues: formal documents, transaction parameters, sources of repayment (e.g. a successful renewable energy auction, PPA), as well as the investor’s capital resources and experience.

The policy was adopted and implemented for the group in 2019. It covers the following industries: coal and lignite mining, coal-related sectors (e.g. production of mining machinery, trading in coal and similar products), generation of electricity or heat (with the exception of renewable energy) and supplementary activities in the power sector (transmission, distribution, cogeneration). The policy is aligned with the European climate policy and goal to achieve net zero emissions by 2050.

The purpose of the policy is a gradual change in the loan portfolio structure towards reducing the exposure to coal-based customers and transactions. The policy was updated in 2020 by introducing stricter criteria of application (as a result, the policy is now applicable to a wider range of enterprises, including those operating in coal-related sectors) and terms of financing:

  • with respect to coal and lignite mining, production of boilers, fireplaces and burners (coal-fired) – reducing the exposure (with the exception of coke, which will remain on the EU list of critical raw materials for the following 3 years),
  • with respect to energy/heat production – not financing any new coal or lignite based sources and gradual reduction of the existing exposure,
  • reducing general purpose financing and transforming it into ESG financing, aimed at energy efficiency improvement, changing the energy mix or modernization of transmission networks (coal based projects can be financed on the condition that the funds are spent on modernization aimed at meeting the growing environmental requirements; in such cases, the purpose of financing must be precisely defined and the use of funds must be controlled),
  • with respect to coal-related industries (e.g. production of mining machines, trading in coal and coal-based products) – gradual reduction of exposure, precise definition of the purposes of financing and control of its use; financing of entities having diversified customer portfolios (i.e. generating significant revenues from other sources not related to mining) or those transforming their operations is acceptable.
The policy was adopted and implemented at the group level in 2019. It defines a framework for financing entities operating in the sectors of oil and natural gas extraction, production and distribution of liquid and gaseous fuels, production and trading in chemicals or chemical products, and production and sales of rubber and plastic products.

The bank adopted a strategy of reducing exposure to operations covered by the EU Single-Use Plastics Directive and a prudent approach to the sectors of oil and gas extraction or production of chemicals, chemical products and rubber products. The prudent approach involves, among other things, an assessment of compliance with environmental standards and impact on the environment and an evaluation of the business model with regard to the concept of sustainable business development.

ESG in the lending process

As part of the ESG project launched in 2020, the bank commenced work on incorporating the ESG risks assessment in the lending process for corporate customers.

The appropriate ESG regulations were introduced internally providing the tools for the estimation, effective assessment and control of non-financial risk of corporate customers. Identification of ESG risks makes it possible to identify projects which do not satisfy growing environmental and social requirements. The ESG risk assessment became a part of the assessment of the borrower’s business model with respect to both new and existing customers. It also affects the terms and conditions of a decision on granting a loan. As a result of the identification of such risks, the bank is able to support the financing of sustainable and socially responsible projects.

For individual sections of the NACE, one of multiple colours was assigned to indicate the possible level of ESG risks in a given industry. Colour mapping allows for easy, preliminary identification of ESG risks in a given activity. The sources of further information are the borrower’s annual reports and press releases as well as an interview with the client, the purpose of which is to thoroughly identify ESG risks in his business. A questionnaire that identifies potential areas for recognition is helpful in conducting a conversation with the client.

The introduction of ESG risk identification to the credit process was preceded by workshops for 300 employees (advisers and analysts). The topic of the workshop was not only to show the process approach, but also to present the role played by ESG factors in the modern world and the reasons for which they gain importance. The bank also organized ESG meetings for customers.

0.79%
Exposure to green sectors
0.66%
Share of thermal modernization loans
0.50%
Share of high-carbon emissions energy sectors

The bank improved its methodology for qualifying environmental criteria and conducted in-depth analyzes of the product portfolio, which improved the quality of the estimates compared to those shown in last year’s report. As at December 31, 2020, the share of corporate and small and medium-sized enterprises (loans and debt securities and the balance sheet equivalent of treasury limits) in industries defined as green (e.g. renewable energy production, sewage disposal, water treatment and supply, collection and waste treatment, rehabilitation, etc.) accounted for 0.79% of the bank’s balance sheet total (2019: 0.96%). Additionally, the bank granted loans to housing cooperatives and communities for the thermomodernization of multi-family residential buildings. Their share of exposure in the balance sheet total was 0.66% in 2020 (2019: 0.72%). The decline in the green portfolio in 2020 was due to the repayments of the existing loan portfolio. The share of corporate and small and medium-sized enterprises (loans and debt securities and the balance sheet equivalent of treasury limits) in the high-carbon energy sectors was 0.50% of the balance sheet total (2019: 0.70%), which indicates the implementation of the adopted Policy for Financing the Carbon-intensive Energy Sector, i.e. a gradual reduction in involvement in these industries.

Responsible products – our response to ESG

Green products of the PKO Bank Polski Group:
Green mortgage offered jointly by PKO Bank Polski and PKO Bank Hipoteczny Customers may obtain a lower margin on the “Własny Kąt” mortgage loan based on the energy performance certificate for the property.
A loan for the thermal modernization of apartment buildings (for housing cooperatives and homeowner associations) offered at PKO Bank Polski Those who receive this loan may obtain non-refundable aid from the state budget in the form of a thermal modernization bonus or an overhaul bonus for repaying 20% of the loan. Execution of projects financed with the “Nasz remont” loan with a bonus provided by BGK makes it possible to reduce demand for energy.
The PKO Environment and Social Responsibility Global investment fund offered by PKO TFI The fund’s assets are invested in entities whose operations are environment-friendly and generate a positive impact on the society. First valuation: 23 October 2019, rate of return till the end of 2020: 5.69%.
A lease or a loan for the financing of photovoltaic devices (products included in the offer of PKO Leasing for enterprises) This product is offered under a simplified procedure (there is no need to provide financial documents) and the customer may obtain financing for both the photovoltaic panels and their installation (the financing of up to PLN 250 thousand may be provided for the whole photovoltaic installation for a period of up to six years). The company finances modules installed on roofs, as well as on the ground.
Eko-loan for the purchase and installation of photovoltaic panels up to the amount of PLN 50 thousand (in the bank’s offer for individuals) The repayment period is from 2 to 120 months, the interest rate is 4.99%, and the commission for granting a loan is 0.99%. The customer should provide an invoice documenting the purchase of photovoltaic devices for a minimum of 85% of the loan amount within 3 months from the date of receipt of the loan. Otherwise the interest is increased to the current maximum interest rate level. As of 2020, Eko-loan is also available to individuals who do not have bank accounts with the bank.
Transactions on the CO2 emission rights market – commodity swaps and commodity forwards Transactions addressed to the bank’s corporate customers who are obliged to redeem such rights every year in accordance with the EU ETS regulations. The customers may trade in such transactions and hedge against changes in the prices of emission rights.
BIZNESMAX guarantees with BGK (in the bank’s offer) A possibility to secure loans for pro-environmental projects, such as circular economy, electromobility, renewable energy sources.
Green mortgage covered bonds of PKO Bank Hipoteczny In 2019, PKO Bank Hipoteczny issued the first green mortgage covered bonds in Poland. The total value of the two issues carried out in 2019 was PLN 500 million (there were no issues in 2020). PKO Bank Hipoteczny is gradually building a portfolio of loans, which qualify for financing with the funds obtained from issues of green mortgage covered bonds. The amount of this portfolio as at the end of 2020 was PLN 7,203 million, i.e. more than 14 times the value of the green mortgage covered bonds issued. The portfolio of loans financed with the issues of green mortgage covered bonds was verified by an external firm (Sustainalytics), which confirmed the correctness of the utilization of funds. The portfolio of mortgage loans qualifying for financing with the proceeds from green mortgage covered bonds offers annual energy savings of 351,597 MWh and allows avoiding annual greenhouse gas emissions of 135,218 tCO2 (which is more than the combined annual greenhouse gas emissions of the whole group).
The PKO Renewable Energy fund – fizan (PKO TFI and the bank) Launched at the beginning of 2021. In accordance with the investment policy, the fund acquires and sells companies whose core business activities comprise generation, sales, transmission or storage of energy from photovoltaic, wind or water installations located in Poland. The first fund participant will be PKO Bank Polski, which plans to invest up to PLN 500 million to increase its participation in the transformation of the power sector.
A syndicated loan for the financing of a portfolio of renewable energy sources owned by a renewable energy producer Qair The loan agreement between Qair and the banks (PKO Bank Polski, Santander Bank Polska and BNP Paribas Bank Polska) signed in February 2021 with a value of PLN 479 million (EUR 105 million). The share of PKO Bank Polski in this financing is 30%. The financing will be used to build a portfolio of 4 wind projects and 29 photovoltaic projects with the total capacity of 106 MW. From the market perspective, the transaction is one of the biggest financing projects in Poland. From the point of view of PKO Bank Polski, this is: (i) the first transaction of financing of the construction and operation of a portfolio of photovoltaic projects; (ii) the first transaction of financing of the construction and operation of wind farms as part of a new nationwide support system, in which the bank actively participated already at the stage of establishment of the transaction structure (the primary debt market). All projects covered by the transaction won renewable energy auctions and will sign 15-year contracts for difference, which will guarantee a fixed level of electricity selling prices.
A syndicated loan for PAK PCE Fotowoltaika A loan granted in March 2021 by PKO Bank Polski and mBank with a value of PLN 138 million for the financing of the construction of a photovoltaic farm with the installed capacity of 70MWp on the grounds of a former mine. The company PAK PCE Fotowoltaika belongs to Zespół Elektrowni Pątnów-Adamów-Konin S.A. It is building a photovoltaic farm on the reclaimed area of a former open-pit lignite mine, which should be completed in the fourth quarter of 2021.
Group in 2020 Financial notes
ESG Social

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