Investor Presentaiton
D. Business Overview (continued)
Enhancing organisational resilience and ESG (Environmental, Social and Governance) agenda
Climate change and transition to a sustainable economy is one of the greatest challenges. As part of its vision to be the
leading financial hub in Cyprus, the Bank is determined to lead the transition of Cyprus to a sustainable future. The
Group continuously evolves towards its ESG agenda and continues to progress towards building a forward-looking
organisation embracing ESG in all aspects of business as usual. In 2022, the Company received a rating of AA (on a scale
of AAA-CCC) in the MSCI ESG Ratings assessment.
The ESG strategy formulated in 2021 is continuously expanding. The Bank is maintaining its leading role in the Social and
Governance pillars and focus on increasing the Bank's positive impacts on the Environment by transforming not only its
own operations, but also the operations of its customer.
The Bank has committed to the following primary ESG targets, which reflect the pivotal role of ESG in the Bank' strategy:
Become carbon neutral by 2030
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Become Net Zero by 2050
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Steadily increase Green Asset Ratio
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Steadily increase Green Mortgage Ratio
≥30% women in Group's management bodies (defined as the Executive Committee (EXCO) and the Extended
EXCO) by 2030
For the Bank to articulate the delivery of its primary ESG targets and address regulatory expectations, a comprehensive
ESG working plan has been established in 2022. The ESG working plan is closely monitored by the Sustainability
Committee, Executive Committee and the Board of Directors at frequent intervals.
Environmental Pillar
The Bank has estimated the Scope 1 and Scope 2 emissions of 2021 relating to own operations in order to set the baseline
for carbon neutrality target. Following the estimation of own operations emissions, the Bank in 2022, designed the strategy
to meet the carbon neutrality target by 2030 and progress towards Net Zero target of 2050. The Bank plans to invest in
energy efficient installations and actions and replace fuel intensive machineries and vehicles from 2023 to 2025, which
would lead to c.7% reduction in Scope 1 and Scope 2 emissions by 2025 compared to 2021. The Bank expects that the
Scope 2 emissions will be reduced further when the energy market in Cyprus shifts further towards renewable energy. The
Bank through installation of solar panels and other energy efficiency actions performed in 2021 and 2022 achieved a
reduction in electricity consumption by 1.8 mn KWh (11% reduction) in FY2022 compared to the baseline year of 2021.
The Bank of Cyprus is the first bank in Cyprus who joined the Partnership for Carbon Accounting Financials (PCAF) in
October 2022. The Bank is currently in process to estimate its financed Scope 3 emissions derived from the loan portfolio
based on transparent, harmonized methodologies in conformance with the requirements of the GHG Protocol Corporate
Value Chain (Scope 3) Accounting and Reporting Standard as provided by PCAF. Following the estimation of financed
Scope 3 emissions derived from loan portfolio and in conjunction with the materiality assessment's results on climate and
environmental risks the Bank will be able to identify the carbon-intensive areas so to take the necessary actions to minimise
the environmental and climate impact associated with the loan portfolio by offering targeted climate friendly products and
engaging with the customers.
The Bank in 2022 launched a low emission vehicle loan product (either hybrid or electric) and intends to further expand its
range of environmentally friendly products that are expected to be launched in 2023. In addition, the Bank is currently
finalising the Sustainable Finance Framework which will enable the Bank to issue Green/Social and/or Sustainable bonds
in the future. The proceeds of such bonds are designated to flow in whole or partly to Sustainable projects which meet the
eligibility criteria set by the Bank. In 2023, following the identification of carbon intensive sectors and asset classes the Bank
is expected to set decarbonisation targets aligned with climate scenario (Science based targets) which will assist in the
formulation of the Bank's strategy going forward.
Moreover, the Bank is making continuous progress on the materiality assessment, identification and quantification of the
Bank's Climate and Environmental (C&E) risks. The Bank is currently in progress to incorporate C&E risks on the
formulation of business strategy and establish an ESG questionnaire with the aim to develop an ESG scorecard which will
form part of the loan origination process in the future. The Bank is developing the risk quantification methodology to assess
how the portfolio is affected by C&E risks and incorporate the above elements into the stress testing infrastructure.
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