Strategy

  • Goal 12 - Responsible consumption and production
    Goal 12 - Responsible consumption and production
    Goal 12 - Responsible consumption and production
  • Goal 13 - Climate action
    Goal 13 - Climate action
    Goal 13 - Climate action
  • Goal 8 - Decent work and economic growth
    Goal 8 - Decent work and economic growth
    Goal 8 - Decent work and economic growth
  • GRI:
  • Description of the bank's approach to integrating the requirements of the ESG regulations into its business strategyCustom indicator
    Description of the bank's approach to integrating the requirements of the ESG regulations into its business strategy
  • TCFD:
  • Climate-related targets, including greenhouse gas emission targetsKE/TCFD
    Climate-related targets, including greenhouse gas emission targets
  • PRB:
  • We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals (SDGs), the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the most significant impact.1 Alignment
    We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals (SDGs), the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the most significant impact.
  • We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services.2 Impact
    We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services.
  • ESG:
  • Our approach to the environmentE- Enviroment
    Our approach to the environment

Our climate ambitions

As one of the largest banks in Poland, we are aware of our role in the transformation of the Polish economy and the importance that our actions, policies and financing will have on this process. The Santander Group’s recently announced global Net Zero strategy is a confirmation of this – we have set ourselves the goal of achieving climate neutrality by 2050. Furthermore, tackling the effects of climate change is an overarching goal of 'green banking’, our Responsible Banking strategy pillar.

Globally, the Santander Group is also a founding member of the Net Zero Banking Alliance, a United Nations initiative led by the banking sector that guides our work on qualitative investment portfolio analysis. Through these activities, we aim to contribute to halting the rise in the global average temperature.

Towards a climate-neutral bank

  • TCFD:
  • Energy-related policy targetsKE/TCFD
    Energy-related policy targets

As Santander Bank Polska S.A., we support the objectives of the global Net Zero strategy through a two-pronged approach:

  • Firstly, we are making efforts to reduce greenhouse gas emissions from our internal emission sources, such as electricity consumption, business travel or fleet operations.

  • Secondly, in line with the TCFD’s recommendations, we are focusing on emissions resulting from our financing, including lending, advisory and investment services provided to customers from all segments. In this way, we want to reduce indirect greenhouse gas emissions in our value chain – from suppliers to end users, i.e. for example the service recipients of our business and corporate clients. The key in this context will be to provide sustainable finance and offer investment advice in line with the Paris Agreement.

Our actions towards clients in the climate area, reducing the bank’s exposure to climate risks, have so far been as follows:

  • In 2019, we waived financing for new thermal coal mines and new thermal coal power units.

  • As of 2020 onwards, all the bank’s contracts with entities that use coal contain clauses prohibiting the application of the financing granted for coal mining and production purposes.

  • At the same time, we support our clients in achieving their business goals and also help them to meet their environmental and climate change regulatory obligations.

On our way to meeting the goals of the Paris Agreement, we have simultaneously committed to the following steps:

  • From 2030 onwards, we will cease to fund energy companies with more than 10% of their revenue from coal-fired generation.

  • By 2030, we plan to completely reduce the bank’s exposure to thermal coal producers (expiration of all contracts).

  • We will achieve climate neutrality by 2050.

Scenario analysis

  • TCFD:
  • The role of management in assessing and managing climate-related risks and opportunities KE/TCFD
    The role of management in assessing and managing climate-related risks and opportunities
  • ESG:
  • Our approach to the environmentE- Enviroment
    Our approach to the environment
  • PRB:
  • We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals (SDGs), the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the most significant impact.1 Alignment
    We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals (SDGs), the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the most significant impact.
  • We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services.2 Impact
    We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services.

Although the impact of climate change on our activities is already beginning to be observed today, the materialisation of more serious risks is expected around 2040 and in the middle of this century. Therefore, in addition to focusing on current risks, our analysis also covers the medium-term and long- term perspective, which, however, is subject to some forecasting error due to assumptions made about the changing CO2 content in the atmosphere, the extent of regulatory action and consumer behaviour.

In view of the above, for the purpose of this report and to enhance our company’s climate resilience, we conducted an analysis that allowed us to identify climate risks and opportunities in detail on the basis of two climate scenarios, covering three timeframes: short-term (2025), medium-term (2030) and long-term (2050).

This approach provides a comprehensive understanding of how climate change may affect our operations and those of our customers in different ways. For the analysis of climate-related risks and opportunities, two  scenarios  were selected in line with TCFD recommendations:

Below 2°C                                                                             4°C
(in accordance with the Paris Agreement)

By effectively defining both the threats and opportunities arising from the climate transition, we are able to take actions that, in both scenarios analysed, provide Santander Bank Polska S.A. with resilience in the context of the key threats, as well as the possibility of exploiting them to improve growth dynamics, financial performance and the bank’s image.

Climate risks and opportunities

The analysis covers the entire value chain and all markets in which Santander Bank Polska S.A. operates. In the analysis two main types of risk were considered, in line with the TCFD approach: physical and transformational. We carried out an analysis of the main risks in both categories and, by identifying the key risks for our latitude, we assessed the risks in the sectors in which our clients operate (for more information on the risk identification and assessment process, see the Methodology Appendix). We considered the evolution of physical and transformational risks across the 19 sectors in our portfolio in three perspectives: short-term (2025), medium-term (2030) and long-term (2050). We conducted a similar exercise, focusing on climate-related opportunities. The analysis process is shown in the figure below:

We recognise the diverse physical risks associated with the impact of weather conditions on business operations. Our clients are exposed to diminishing returns on inputs caused by circumstances that prevent uninterrupted business operations, which can translate into a reduced ability to repay debt.

Sources of physical risks include extreme weather events, such as violent storms or floods, which in many sectors can cause infrastructure disruption or destruction. Particularly exposed to physical risks, by the very nature of the business, is the agricultural  sector, where we have seen an increased risk of land erosion affecting the quality and quantity of yields.

In the medium to long term, we identify physical risks associated with Poland’s deteriorating hydrological situation and the threat of drought. The lack of adequate water retention systems and water shortages may have a range of negative effects, affecting other sectors of the economy, including the energy sector. For example, combined heat and power (CHP) plants, which rely on river water for their cooling systems, may have to reduce power generation during periods of drought. We also saw a fire risk in the soft commodities sector, potentially causing losses in timber production, among others.

Particularly vulnerable in the context of the transition to a low-carbon economy are sectors dependent on coal and other fossil fuels, on which the Polish energy mix is predominantly based. We recognise the regulatory and legal risks associated with higher CO2 costs, stricter reporting and data collection requirements, and even regulatory changes restricting the operation of some particularly environmentally damaging entities.

Regulatory risks may also arise as a result of revised regulations imposing climate-friendly solutions, which for some companies will mean higher costs of doing business. For example, in the automotive industry, the falling cost of electric vehicles and expected regulations at EU level may lead to stranded assets in the combustion car supply chain. At the same time, market competition may force companies from our portfolio to invest in increasingly innovative machinery.

We also recognise market risks due to the impact of climate change on market variables such as consumer choices, changing interest rates and commodity prices. Worth noting are also reputational risks linked to growing consumer awareness. We understand that all of the above risks can affect the bank both directly and through our customers.

Results of the analysis of the risks’ impact on the bank

  • TCFD:
  • The main climate risks across the value chain in the short, medium and long-term. perspective. Risk maps that take climate-related issues into accountKE/TCFD
    The main climate risks across the value chain in the short, medium and long-term. perspective. Risk maps that take climate-related issues into account
  • ESG:
  • Our approach to the environmentE- Enviroment
    Our approach to the environment
  • PRB:
  • We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals (SDGs), the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the most significant impact.1 Alignment
    We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals (SDGs), the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the most significant impact.
  • We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services.2 Impact
    We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services.

The approach discussed above allows for the integration of climate risk management as part of a broader, comprehensive risk management process. In line with TCFD recommendations, the outcomes of the analysis of physical and transformational climate risks have been integrated into the taxonomy adopted by the bank. The results of the analysis are presented in the table below.

Banking risk Impact of physical risks Impact of transformational risks Risk management approach
Credit risk
  • Climate risks can negatively affect borrowers and reduce their ability to repay their debt, particularly in the agro sector where physical risks can reduce crop income.
  • More frequent and intense sudden weather events and natural disasters may  additionally decrease the value of the loan collateral.
  • EU or national regulations may adversely affect the debt sustainability of business borrowers operating in certain sectors, primarily in carbon-intensive sectors such as:
    • energy sector,
    • fuel sector,
    • transport and logistics, and
    • agro sector.
  • Current risk management activities include assessing the vulnerability of companies in high-emission sectors (e.g. fuel, energy) to transformational risks. In accordance with our internal procedures for Environmental and Social Risk Analysis, we have defined risk categories (understood as individual ESRM recommendations for SCIB clients and 'environmental flags’ for BCB clients described in the Corporate Governance chapter). Depending on the level of assessed risk, we have defined a strategy and risk appetite.
  • We also monitor the impact of regulatory changes and technological advances in the automotive sector – companies that do not match the profile defined by us may not be eligible for funding.
  • In future, we plan to significantly increase the frequency of risk assessments in this area and work on model solutions.
  • At the same time, we are considering the introduction of a systemic solution for assessing the impact of CO2 prices on the financial viability of companies (especially in high-emission sectors). Energy price stress tests will also be an important factor.
Market risk
  • Risk of losses arising from changes in the value of the bank’s assets and liabilities caused by natural disasters, sudden weather events.
  • An increase in the costs associated with CO2 emissions may raise the costs for some companies (particularly in carbon-intensive sectors such as energy and fuel). This may lead to a reduction in revenue for these companies and, consequently, a lower capacity to undertake new investments, which in turn may reduce the number of new loan applications.
  • Regulatory pressures can indirectly affect the financial market by limiting investments in selected client groups.
  • We monitor regulatory changes and take a number of measures to support our customers, e.g. by launching financing for low-carbon solutions that lead to the mitigation of these risks
Liquidity risk
  • Climate change, including natural disasters and sudden weather events, can cause a rapid increase in the demand for cash.
  • No significant impact of transformational risks has been identified.
  • In line with European and national regulations, we have adequate reserves and procedures in place.
Operational risk
  • Sudden weather events can affect the conduct of business at bank branches (e.g. flooding, power outages).
  • Increased energy costs may raise the expenses incurred by the bank (e.g. increase in the property rental charges).
  • In 2020, 100% of the energy purchased by the bank was green energy.
  • 50% of our branches use energy-efficient lighting.
Model risks
  • Business models may underestimate the value of losses caused by sudden weather events, which are increasing in intensity and frequency.
  • Business models may underestimate the impact of regulation and market changes due to climate change, especially in the context of supply chain analysis
  • We monitor the impact of weather events on the volume of losses and analyse the impact of regulation on all parts of the supply chain.
  • With the support of an external advisor, we carried out a process of climate risks identification and analysis in the bank’s key sectors under two climate scenarios and three time horizons. The results, presented in this report, will allow for better calibration of models and improved management in specific areas.
Business risks
  • No significant impact of physical risks has been identified.
  • In the short-term perspective, increased costs associated with the transition to a low-carbon economy are observed. Some of these costs are also passed on to consumers, which may reduce their willingness and/or ability to take out consumer loans (e.g. to finance a purchase of a new car).
  • Regulation and changes in customer choices can create new product and service opportunities. Failure to address them or addressing them too late can lead to a loss of customers to competitors.
  • We continuously analyse the market situation and the actions of competitors, introduce new products to our range and maintain a dialogue with customers.
Reputational risk
  • No significant impact of physical risks has been identified.
  • Continued funding of sectors negatively perceived by regulators, the market and rating agencies (mainly carbon-intensive sectors) could negatively affect the bank’s rating.
  • We pay particular attention to the transparent communication of sectoral policies.
  • We are integrating the Santander Group’s global reputational risk management policies into our region.
  • We have a policy of engaging clients in  counteracting climate and environmental change in relation to the fuel, energy and soft commodities sectors. We conduct reputational analysis in this context and analyse our clients’ climate strategies.
Compliance risk
  • No significant impact of physical risks has been identified.
  • The regulatory pressure is likely to intensify, with a potential impact on increased in-house and/or advisory costs as a result of the obligation to comply with new regulations.
  • If new regulations are not complied with, there may be a risk of penalties imposed by market regulators.
  • We keep our bank’s regulations under review and fully comply with the requirements set by EU and national regulators.
  • As part of the global Santander Group, we are a member of the Net Zero Banking Alliance

The identified key risks, together with the scenario analysis described above, will be used to prepare appropriate risk mitigation initiatives, strengthen the resilience of the bank’s strategy and adapt to a changing climate. The process of identifying and assessing climate risks is carried out in accordance with the policies and processes described in the next chapter.

Climate opportunities

  • TCFD:
  • Opportunities related to resource efficiency, cost savings, use of low-carbon energy sources, development of new products and services, access to new markets and building resilience across the value chainKE/TCFD
    Opportunities related to resource efficiency, cost savings, use of low-carbon energy sources, development of new products and services, access to new markets and building resilience across the value chain
  • ESG:
  • Our approach to the environmentE- Enviroment
    Our approach to the environment
  • PRB:
  • We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals (SDGs), the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the most significant impact.1 Alignment
    We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals (SDGs), the Paris Climate Agreement and relevant national and regional frameworks. We will focus our efforts where we have the most significant impact.
  • We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services.2 Impact
    We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services.

Although climate change is mainly associated with threats, many of the investments needed to meet energy and climate targets also present opportunities. As the European Commission points out, additional investments of EUR 180 billion per year are already needed to meet the 2030 climate targets. In addition, further measures will be required to achieve full climate neutrality by 20501. This reality is an opportunity to build new infrastructure with zero emissions in mind. In addition, the expected EU regulations in the transport sector provide an opportunity to finance the replacement of company car fleets with zero- or low-emission vehicles.

The transition towards a low-carbon economy therefore presents us with opportunities to support both our current and future customers as well as the economic transition by mobilising appropriate financing mechanisms. We therefore want to develop new products and services, including customer advice, while building a brand as a trusted partner. As part of our analysis, we have identified the following opportunities for Santander Bank Polska S.A. :

Opportunity Relevant sector/area Short term:1-3 years Medium deadline:
2025-2030		 Long term:
2030 +
Development of the RES market creating opportunities for investment in projects and companies related to this sector energy sector / cross-sector x x x
Opportunities for involvement in projects and cooperation with companies active in the development and modernisation of pumped-storage power plants energy sector x x
Potential for participation in the financing of decarbonisation projects for the bank’s existing clients cross-sector x x
Possibility to be involved in financing projects promoting electric or low-emission cars transport / automotive x x
Financing, especially in the public sector, of low-carbon transport solutions transport / automotive x x
Development of advisory services for the selection of low-carbon solutions for the agro sector and development of financial services in this area agro sector x x

1 European Commission Communication 20.06.2019, Guidelines for reporting non-financial information: Supplement on reporting climate-related information.