Templates presenting GAR calculation

The list of the Group’s customers subject to non-financial reporting obligations (in accordance with the criteria laid down in Article 19a and 29a of Directive 2013/34/EU on the annual financial statements, consolidated financial statements and related reports and Non-Financial Reporting Directive 214/95/EU) was defined using the databases of third parties, particularly BIK (domestic entities) and Clarity Ai (EU entities based outside Poland).

In the case of general purpose debt instruments, the value of Taxonomy-eligible and Taxonomy-aligned assets was calculated as a product of the gross value of exposures and relevant turnover and CapEx KPIs. These indicators were provided by third parties, i.e. BIK (in terms of domestic entities) and Clarity Ai (in terms of non-residents). They come from the publicly available statements of non-financial information published by entities subject to NFRD.

In the case of specific purpose loans and advances and instruments issued to finance specific investments, the economic activities financed by the Group were assessed on a case-by-case basis in terms of Taxonomy eligibility, i.e. if they were included in the EU Taxonomy as part of individual climate objectives. If the result of the assessment was positive, they were subsequently analysed in terms of Taxonomy alignment, i.e. if they met the technical criteria (contribute substantially to one climate objective and cause no significant harm to other environmental objectives) and minimum social safeguards (meet specific social and ethical standards).

The methodology, analysis and results of both stages of the Taxonomy assessment were reviewed and approved by the ESG Panel. The Panel reviews the transactions made by business units of Santander Bank Polska Group (excluding Santander Consumer Bank Group) and decides if they meet the criteria of the EU Taxonomy, internal sustainable finance classification system (SFCS) and transition finance classification system (TFCS). Entities of Santander Consumer Bank Group collect data and conduct Taxonomy analyses independently. The final templates are aggregated at the level of Santander Bank Polska S.A. as a parent entity.

Transactions with credit institutions and other financial institutions (understood exclusively as insurance companies, investment firms and asset managers) gave rise to general purpose exposures and qualified as Taxonomy-eligible to the extent indicated by the KPIs published by the above-mentioned customers. Exposures to financial institutions were not assessed in terms of Taxonomy alignment because of the transition period effective until the end of 2023, during which those entities were only required to publish the eligibility ratio.

In the Corporate and Investment Banking Division, expert judgment was used to assess Taxonomy eligibility of specific purpose exposures to corporate customers subject to the NFRD arising from term/investment loans, syndicated loans, trade finance and project finance.

In the Business and Corporate Banking Division, Taxonomy-eligible debt instruments were identified either on the basis of expert judgment (in the case of older exposures) or igitalized results of the questionnaire obligatorily completed by customers subject to the NFRD applying for special purpose loans as part of the regular classification of loans based on the EU Taxonomy and the internal sustainable finance classification system (in the case of new exposures).

The eligibility of leasing transactions with customers subject to the NFRD was assessed on the basis of the leased assets.

As a result of the review and verification of the transactions from the Group’s debt instrument portfolio (both Business and Corporate Banking and Corporate and Investment Banking) in terms of the type of the financed activity and its inclusion in the EU Taxonomy, the activities were classified as Taxonomy-eligible in accordance with Commission Delegated Regulation (EU) 2021/2139 establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives.

Transactions classified by the ESG Panel of Santander Bank Polska S.A. as sustainable finance in line with the internal sustainable finance classification system (SFCS) were thoroughly reviewed in terms of their alignment with the EU Taxonomy.

In 2023, the assessment covered specific purpose lending in the form of project finance originated by the Corporate and Investment Banking Division not disbursed earlier than in 2022. Based on the information collected, one transaction with an SPV of a customer subject to the NFRD was identified.

Both the customer and Santander Bank Polska Group are still conducting the assessment and collecting evidence for the purpose  of Taxonomy disclosures.  As part of the transaction, a loan of PLN 251m was granted, of which PLN 26.7m was disbursed as at 31 December 2023. The activity subject to assessment is electricity generation from wind power, which contributes to climate change mitigation.

In the Business and Corporate Banking segment, one potential Taxonomy-aligned specific purpose transaction with a customer subject to the NFRD was identified. Lending is to be disbursed next year. The Taxonomy assessment is in progress. As a result, no transaction from the Business and Corporate Banking segment was included for further analysis.

Santander Bank Polska Group identified the following products for households as Taxonomy-eligible: home loans and loans for biomass-fuelled heating devices, electric car charging stations, solar collectors, photovoltaic panels/installations, heat pumps, wind turbines, passenger cars and delivery vans up to 3.5t granted on or after 1 January 2022.

The following facilities were classified as Taxonomy-aligned: loans for electric car charging stations, solar collectors and photovoltaic panels/installations which do not cause significant harm to objectives related to climate change adaptation. The assessment was made on the basis of customers’ postal codes and the database prepared by Munich Re, including information about the severity and frequency of climate threats in NUTS territorial units in Poland.

The Taxonomy-aligned products also included home loans of Santander Bank Polska S.A. (excluding the portfolio of Santander Consumer Bank S.A. as those loans were withdrawn from the offer in 2009) that met the criterion of substantial contribution based on the analysis of data included in the central register of energy performance certificates (issued in Poland since 2015) and the “do no significant harm” criterion with regard to climate change adaptation.

As it was not possible to automatically separate mortgage loans for development of new buildings or loans for purchase of residential properties, such loans are presented at an aggregate level as part of the portfolio secured by residential properties. In order to assess if the above portfolio contributes substantially to climate change mitigation, a more stringent criterion was used, i.e. the criterion applicable to buildings constructed after 31 December 2020, according to which the primary energy demand should be at least 10% lower than the threshold set for nearly zero-energy buildings in the domestic legislation implementing Directive 2010/31/EU of the European Parliament and of the Council. To that end, the ratio showing the annual demand for non-renewable primary energy for space and water heating, ventilation and cooling was compared with the threshold value reduced by 10% (calculated in line with the formula presented in § 329(1) of the Notice of the Minister for Development and Technology of 15 April 2022): 63kWh/(sqm*year) for single-family residential buildings and 58.5 kWh/(sqm*year) for multi-family residential buildings.

The physical risks of the portfolio of loans secured by residential properties were assessed on the basis of customers’ postal codes and the database of NUTS territorial units in Poland including information about climate threats of high severity or frequency on a given territory.

Due to insufficient evidence resulting from disproportionate efforts and resources required to obtain relevant information and confirmations from customers for the purpose of reporting for 2023, loans for electric and plug-in hybrid cars and loans for biomass-fuelled heating devices were not classified as Taxonomy-aligned.

The Group did not grant loans to local governments to finance residential or commercial properties. No other specific purpose lending was sanctioned to that group either.