Mediobanca has been a pioneer among Italian Banks in designing ESG governance, starting from the Board of Directors assignment to the Chief Executive Officer, on 14 June 2017, of the responsibility oversight over sustainability activities. In the following years Board, Directional and Management Committees have been set up to cover specific sustainability topics, increasing awareness of risk and opportunities related to environmental topics (in particular on climate change), ensuring that all levels have: adequate understanding of the issues, dedicated resources and skills to identify and manage risks and to seize opportunities arising from this matter. [...] Mediobanca has adopted a traditional system of governance based on the appointment of a Board of Directors and Statutory Audit Committee by shareholders gathered in Annual General Meeting. [...] The Board of Directors is responsible for strategic management and oversight, approving the Bank's strategic direction, including sustainability and ESG/climate related topics, and reviewing their implementation on an ongoing basis by defining the Bank's overall governance and organizational structure. In this context, the Board of Directors is responsible for, inter alia: defining the business model, in full knowledge of the risks to which such a model exposes the Group and the Bank; approving the strategic guidelines and direction, business and financial plans, and budgets (monitoring their implementation, and regularly comparing the results delivered with those planned); approving the draft of individual and consolidated financial and non financial statements, as well as Pillar III disclosure; reviewing and guiding the risk management process, by approving the Risk Appetite Statement («RAS»), the Risk Appetite Framework («RAF»), risk objectives, risk governance policies and tolerance thresholds (where identified), checking them to ensure they are consistent with the strategic plans adopted; the main Internal Regulations, Policies and Codes, including its Code of Ethics, Code of Conduct, as well as Group Sustainability Policy and Group ESG Policy which also cover relevant climate related topics. It is also responsible for compiling the staff remuneration and incentivization policy (including the sustainability ESG related performance indicators contained therein), submitting it to the approval of shareholders in Annual General Meeting, and revising it on at least an annual basis, and is responsible for ensuring it is implemented correctly in practice. During FY 2022-23 the Board of Directors met 10 times and in each meeting climate related documents and topics have been discussed/approved, including the ones listed below, thus exercising its oversight on climate-related risks and opportunities related to banking and investment activities performed by Mediobanca as well as on the impacts generated directly (i.e with its own operations) and indirectly (through banking, investing and advisory activities) on the climate by the Group. [...] On 24 March 2022 the Board of Directors announced that the governance of climate strategy and risk are respectively under the responsibility of Corporate Social Responsibility (CSR) Committee (following CEO proposal) and Risks Committee, the latter providing support to the Board in its supervision of ESG risks, with reference in particular to the implications of climate and environmental risks on business model and strategy. The Board CSR Committee - set up in September 2019 – meets at least on a quarterly basis and currently consists of the Chief Executive Officer (who chairs it) and 4 non-executive Directors. The Group General Manager, Group Chief Governance Officer, Group Chief Sustainability Officer and Group Chief Risk Officer take part in Committee meetings, along with any other Group staff invited by the Committee Chair based on the items on the agenda. The Committee ensures that the Group is correctly positioned with respect to its strategy of sustainable growth (including from a climate-related point of view) over time, valorising its staff, sensitivity to social issues, and reducing direct and indirect impact on the environment. It has responsibility for processing sustainability proposals/documents to be submitted to the Board's approval including the Group Sustainability and Group ESG Policies, the Consolidated Non-Financial Statement and (following CEO proposal) the ESG (and in particular climate-related) strategy. Besides the Committee liaises with the Remuneration Committee to assess whether the ESG objectives set in the management scorecards have been met. During FY 2022-23 the CSR Committee met 5 times and assessed, inter alia, the following climate related documents and topics, thus supporting the Board of Directors in the exercise of its oversight role on climate related opportunities and direct and indirect impacts. Monitoring of the 2021-2022 CNFS and TCFD Reports stages Overview of the setting of the 1st set of Net Zero Target (Power and Automotive) Green, Social and Sustainability Bond Report Overview of best practice Decarbonization Plans Revised Group Sustainability Policy Revised Group ESG Policy 2023 Material topics Monitoring the implementation of the Climate related objectives to be included in the 2023-2026 Strategic Plan. Each immediately following Board meeting is informed about and, to the extent applicable, takes decision in relation to proposal submitted for approval in relation to the topics prediscussed on the preceding CSR Committee meeting. Besides the CSR Committee held on 8 September 2023 approved the 2022-2023 Consolidated Non-financial Statement and reviewed the 2022-2023 TCFD Report which contains the 2nd set of Net Zero Target (related to cement and aviation) and the transition plan related to the 1[st] sectoral targets (energy and automotive). The Board Risks Committee meets at least on a monthly basis and consists of 5 non-executive Directors; the Statutory Audit Committee attends the meetings too. The Group Chief Governance Officer, Group Chief Risk Officer, Group Chief Financial, Group Chief Audit Officer and Group Chief Compliance Officer take part in Committee meetings, along with any other Group staff invited by the Committee Chair based on the items on the agenda. At least twice a year, the Chief Executive Officer and the Group General Manager participate in meetings to report on the adequacy of the internal control system. The Committee advises and supports the Board of Directors with respect to internal control, risk evaluation, monitoring and management (including ESG/climate related/environmental risks) and the accounting/reporting model. Inter alia it: a) supports the Board of Directors in the supervision of risk management policies; b) regularly checks the functioning and efficiency of the risk control and management system and procedures; and c) reviews plans for calculating the adequacy of the Bank's current and estimated aggregate capital at consolidated level with respect to large risks that the bank and group are exposed to (ICAAP), reporting the results to the Board of Directors. The Committee also checks that the Bank's remuneration and incentivization system is consistent with the RAF and defines the Bluebook KPIs for the scorecard of Top Management. During FY 2022-23 the Risks Committee met 18 times and assessed, inter alia, the following climate related documents and topics, thus supporting the Board of Directors in the exercise of its oversight role on climate related risks connected both to the own operations of the Bank and its business model. New strategic and operational plan to advance the identification and management of climate related and environmental risks (following 2022 ECB Thematic Review) Update on the bank's climate-related and other environmental risks disclosures practices and adherence to supervisory expectations RAS and RAF: incorporation of climate key risk indicators (KRIs), RAF monitoring and update to take into account additional physical risk and transition risk metrics ICAAP: economic perspectives are updated to take into account the quantification of physical risk and transition risk Pillar III (including section. 8 ESG risk) Quarterly review of the Corporate Loan & Investment Portfolio ESG Heatmap Cimate Stress Tests Results Group Risk Map (including climate risk) updates ESG (including climate) related Issuer Risk limits review Remediation plan following 2022 ECB Climate and Environmental risk Thematic Review Focus on Portfolio Alignment Methodology Monthly update on «Single Supervisory Mechanism» (interaction/requests from the Supervisor, including climate related ones) The immediately following Board meeting is informed about and, to the extent applicable, takes decision in relation to proposal submitted for approval in relation to the topics pre discussed on the preceding Risk Committee meeting. [...] The Chief Executive Officer is responsible for governance of sustainability and corporate social responsibility activities, for the implementation of action to be taken in this area and for monitoring it, ensuring that the Group is positioned correctly on sustainability issues in the relevant areas. Given his crucial organizational position, CEO plays a catalyst role on the Bank's line of action, guaranteeing an effective connection in all bottom-up or top-down decision-making processes between the Board and the management, ensuring that the Group is correctly positioned on these issues in the affected areas. During FY 2022-23 the CEO has been deeply involved, in the following activities. Review of the Consolidated Non-financial Statements and TCFD Report Monitoring of group initiatives and activities to develop climate risk awareness within the organization and the business Implementation of Mediobanca Climate Transition Plan Setting of 2023-2026 Strategic Plan, including climate related targets Continuous monitoring of the corporate loan and investment portfolio of Mediobanca to assess the ESG (incl. Climate an Environmental) risk thereof: an updated heatmap is analyzed and discussed on a quarterly basis in the context of Group Risks Management Committee (see below) Single name credit and investment decisions also based on climate related risk assessments in the context of Lending and Underwriting Committee (see below). Please note that decisions of the any topic discussed in the committees mentioned in the last two bullets requires necessarily the Chief Executive Officer's approval which has a – de facto – veto right. The attendance in the main Committees allows for a safe and correct flow of information that enable the CEO to be informed, monitor and have a clear vision of business risks and opportunities, including those climate-related. [...] The Group Risks Management Committee («CGRG») examines in advance, and expresses its opinion on, resolutions on risk-related issues for which the Risks Committee, the Executive Committee and the Board of Directors have responsibility, with reference in particular to the ICAAP, ILAAP, RAF and the risk assessment policies. The Committee monitors the development and operation of commercial, lending and financial policies in accordance with the RAF. The Committee defines and updates the framework for managing the impacts deriving from ESG risk factors (including environmental and climate related risk), evaluates their sub-division in terms of regulatory risk, assesses the set of methodologies employed on a regular basis, and monitors the overall effectiveness of the measures adopted. The Committee meets at least once a month and consists of five members with powers of approval (the Chief Executive Officer; Group General Manager; Group Chief Risk Officer; Chief Executive Officer of Compass and CheBanca!) and some non-voting guests including the Chairman and the Chief Group Sustainability Officer (if ESG related risks are discussed). Resolutions of the Group Risks Management Committee are approved with a majority of members with powers of approval voting in favour, including necessarily the Chief Executive Officer's approval. The Lending and Underwriting Committee («LUC») has been attributed risk-taking powers within the limits set forth in the 26 October 2021 Executive Committee Resolution in respect of operating powers. Such resolution has also explicitly delegated the LUC to examine the ESG risk profile of the counterparties named in the proposed lending resolution. The Committee meets regularly (at least once per month, but de facto more frequently). LUC members with powers of approval are the Chief Executive Officer, Group General Manager and Group Chief Risk Officer. Resolutions are approved with a majority of members with powers of approval voting in favour, including necessarily the Chief Executive Officer's approval. The Group Non-Financial Risks Committee is responsible for monitoring and mitigating non-financial risks. In particular, the Committee checks the non-financial risk profile of Mediobanca and main Group companies on a regular basis, through analysis of the most significant non-financial risks, including climate-related operational and reputational risks. The Committee meets at least once every three months; members with powers of approval are: Group General Manager, Group Chief Risk Office, Head of Group Technology and Operations; Head of Non-Financial Risks Management and Head of Compliance & Group AML. It evaluates and arranges the actions/initiatives necessary in order mitigate non-financial risks, issuing specific mandates to the relevant bodies carry them out, monitors the effectiveness of the mitigation actions and provides indications regarding the possible creation of provisions in order to cover specific non-financial risks. The Committee also examines the results of the checks and tests of the business continuity plan and the possibility of updates to the plan itself. Resolutions are approved with a majority of members with powers of approval voting in favour, including necessarily the Group General Manager's approval. [...] The Group Sustainability management Committee has the task to propose, promote and monitor initiatives aiming to have a positive contribution on the community both in terms of direct and indirect impacts as well as to make sure that such actions are in line with the stakeholders expectations and are adequately represented and reported inside and outside the Group. It supports the CEO and the CSR committee in the definition of the overall ESG strategy including the approach to climate topics at Group level. In the last few years, for instance, it has evaluated and, where necessary, submitted several initiatives to the CSR Committee, including updating internal Policies and adhering to voluntary ESG goals and frameworks (including the Sustainable Development Goals, Principles for Responsible Banking and the Net-Zero Banking Alliance). It also oversees how climate topics are integrated into the activities and business of the various legal entities, inter alia: a) selecting the CSR and ESG (including climate related) initiatives b) evaluating the Group's ESG product offer, monitoring their contribution to the Group's results. c) expressing a prior opinion on the plan to reduce the carbon footprint of the Group's portfolio and, consequently, on the sectoral transition plans drawn up in compliance with the requirements of the Net-Zero Banking Alliance. From a climate disclosure point of view, the Committee expresses a prior opinion on the drafts of the Consolidated Non-Financial Statement as well as on the draft of the Task Force on Climate-Related Financial Disclosures (TCFD Report) and the documents that the Group is required to publish having adhered to the Principles for Responsible Banking and the Net Zero Banking Alliance, defining the methods of communication. It also provides a prior opinion on the Principal Adverse Impact (PAI, including those climates related) reduction targets for the portfolio management service on an individual basis, i.e. the main negative effects for sustainability deriving from investment decisions. The Committee meets at least once every two months and is composed of the following members with powers of approval: the Chairman of Mediobanca; Chief Executive Officer; Group General Manager; Group Chief Sustainability Officer; Group Chief Risk Officer; Chief Executive Officer of Compass and CheBanca!; Group Chief Human Resources Officer; Group Chief Financial Officer; Group Chief Strategy & Investor Relations Officer; Group Chief Governance Officer. Representatives of both business and staff units can be invited. Resolutions of the Committee are approved with a majority of members with powers of approval voting in favour, including necessarily the Chief Executive Officer's approval. The Group Direction and Control Committee meets at least once every six months and, with reference to the principal Group Companies, shares the strategic plan and budget, discusses earnings and commercial performances, monitors and reviews the main strategic projects, reviews commercial initiatives (including ESG ones), checking consistency with the risk appetite adopted of the Group as a whole and of the individual Group companies. The committee includes members with voting powers of both Mediobanca (Chief Executive Officer; Group General Manager; Group Chief Financial Officer; Group Chief Risk Officer, Head of Planning, Control & Budgeting, Head of Group M&A, Group Chief Strategic Corporate Development & Investor Relations Officer); and other Group Companies (Chief Executive Officer and/or General Manager; the Head of Administration, or, if a different person, the Head of Planning and Control; Head of Risk Management). The Chairman of Mediobanca is invited to participate in Committee meetings, along with any other Group staff that may be invited based on the items on the agenda. The Head of Group Sustainability is invited in case of reviewing commercial initiatives regarding ESG area. Resolutions are approved with the majority of members with powers of approval voting in favour, including necessarily the Chief Executive Officer's and Group General Manager's approval. [...] Several units are involved in the assessment and management of climate risks and opportunities; internal regulations are constantly updated to reflect C&E risk management roles, responsibilities, reporting and methodologies. Activities among the Bank's departments which are summarized below: The following Units are involved in the internal environmental risk control framework Front Office contributes to the definition of the ESG strategy taking into account climate related risks and business opportunities in light of the market context receives climate related objectives deriving from the Group's adherence to ESG agreements/initiatives and translates them into the business offering analyzes, together with Risk Management, clients' climate transition plans and actively engages clients to encourage the adoption of Paris aligned business models manages the credit portfolio in coherence with ESG Credit Guidance and RAF together with Risk Management and Group Sustainability, checks the correct application of the Group ESG Policy (negative screenings and ESG investment limits). Group Risk Management units, each for its own areas of competence, defines methodologies aimed at measuring the impacts of environmental/climate related risk (both physical and transition) on the different risk categories (credit, market, liquidity and non-financial risk). It also supports regular reporting internally and to supervisory authorities on issues related to climate and environmental risk. Below some of the tasks performed: manages relations with the Supervisory Authorities also in relation to climate risk expectations, and with the support of Group Sustainability, monitors external regulation and best practices for climate risk management oversees the qualitative and quantitative integration of climate issues in – inter alia - RAF and ICAAP frameworks; defines, implements and updates on at least an annual basis the «materiality assessment», prepares the Risk reporting periodically shared with to the Board; coordinates the regulatory and management stress tests (incl. climate related ones); assess the exposure to climate risks of the credit and the proprietary investments portfolio, inter alia preparing and updating of the ESG «Heatmap» assess the «single name» ESG risk and – together with Group Sustainability check compliance of the ESG Policy of borrowers and invested counterparties defines the methodology and carries out the calculation of the Group's portfolio emissions («Scope 3») and portfolio alignment analysis exercises assesses, together with the Compliance & Group AML unit, the reputational risk aspects related to ESG factors. assesses operational risk connected to climate topics (i.e. business continuity of the Group's structures and of the main outsourcers). Compliance and Group AML presides over the regulatory risks facing the Group and the reputational risks deriving therefrom. Within the broader ESG spectrum, Compliance and Group AML manages the AML, anti-bribery and corruption, and greenwashing risks. With specific reference to climate-related and environmental topics, Compliance unit is involved in the definition of the framework in co-operation with Group Risk Management and Group Sustainability. [...] The following Units have strategy setting and reporting responsibility Group sustainability supports the CEO and the Corporate Bodies in defining the ESG strategy and setting up the ESG (including climate-related) objectives and KPIs included in the Strategic Plan prepares and updates sustainability and ESG Policies and proposes initiatives to be submitted to the CSR Committee and the Board of Directors for approval establishes the portfolio alignment targets to achieve the objectives set by the protocols to which the Bank adheres (and in particular by the Net Zero Banking Alliance) supports CFO, Risk Management and Front Office areas in the context of planning/budget activities to understand the impacts of the ESG strategy on business supports Group HR in the definition and monitoring of ESG KPIs included in the short-term and long-term incentive schemes (including those climate related) supports Risk Management and Front Office in verifying compliance with the screening criteria set out in the ESG Group Policy. CFO unit supervises the process and data consolidation and monitors the quantitative climate related objectives and KPIs that are part of the Strategic Plan/Budget coordinates the planning/budgeting process (including climate related aspects), carrying out ex-post monitoring activities and actively collaborates with Group HR and Group Sustainability in the definition and periodic monitoring of climate related KPIs inserted into the remuneration reward system, providing the Remuneration Committee with detailed information on the results achieved through the Group Treasury unit, it takes care of the origination and structuring of financial instruments related to sustainable finance and manages the related Green, Social and Sustainable Bond Framework asset pool besides, it defines and updates the internal funding cost transfer curve (FTP), integrated with ESG logic. Group sustainability is responsible for the preparation of the Consolidated Non-Financial Disclosure (and to this end coordinates the process of collecting contributions from the various structures of the Bank impacted) and for collecting the eligibility and alignment data required by the legislation in the Taxonomy field (also coordinating the LEs in the perimeter) and for preparing the disclosure on such data is responsible for producing and publishing the disclosure required by the Task Force on Climate-Related Financial Disclosures ("TCFD") and by the Principles for responsible Banking ("PRB"), producing the sections for which it is responsible and coordinating the collection of information from the other Bank units involved contributes to Pillar III ESG disclosures. Other Units involved in climate related topics are prepares the Public Disclosure (Pillar III) including ESG tables (information set with directly derived accounting data and financial data on physical risk, GHG emissions and other data required by the Taxonomy), for which it coordinates the collection of information from the other units (es. Risk Management, Group Sustainability) contributes to the preparation of Taxonomy disclosure contained in the DNF providing accounting/financial data prepares the Green, Social and Sustainable Bond Framework annual reporting information. IT – Mediobanca Innovation Service (MIS) is responsible for the design, implementation and maintenance of the architecture underlying the ESG reporting framework and of the tools to support ESG activities (heatmaps, ESG questionnaires on the credit risk side, etc.), ensuring the consistency of the data used for the needs of the different structures. Group HR actively collaborates with Group Sustainability and CFO area in the definition and periodic monitoring of climate related KPIs inserted into the remuneration reward system in coordination with Group Sustainability (and if necessary, with Risk Management) organizes and delivers training sessions towards the operating structures on climate and environmental topics to promote corporate culture on these issues. Group Technology and Operations through the "Group Data Office" unit, periodically checks the quality of the ESG data, integrating the data quality framework with controls on specific data/information flows prepared to meet the Bank's ESG needs (including those required by the Taxonomy disclosure).