Banque Cantonale Vaudoise

BCV's Board of Directors reviews and approves the Bank's CSR strategy and objectives. It also reviews and approves the sustainability report and this policy. [...] The Bank's Compensation, Promotions and Appointments Committee supports the Board of Directors in its duty of high-level oversight, particularly in the areas of CSR and governance. Twice a year, the Committee reviews the Bank's progress on implementing the CSR strategy, including with regard to targets and the preparation of the sustainability report. It also reviews the Bank's material topics as part of the process of preparing the sustainability report, in accordance with the GRI Standards. And it reviews and provides input on the sustainability report for the Board of Directors. [...] The Audit and Risk Committee is tasked with ensuring the application and operation of risk control and management at BCV, including for climate-related risk. It assists the Board of Directors in assessing the risks faced by BCV, and in organizing the Bank's risk-management and control processes. This Committee also oversees the limited assurance procedures applied to the sustainability report. [...] BCV's Corporate Social Responsibility team, which reports directly to the CEO, coordinates and oversees implementation of the CSR strategy across the Bank. This team regularly submits reports to the Executive Board on the different projects being carried out at the Bank as part of the CSR strategy. [...] Designated CSR representatives at each of the Bank's business lines are in charge of further embedding sustainability into their operations and helping coordinate efforts across the Bank. They propose their roadmaps, which encompass risks, opportunities, and impacts, and report on their progress to the CSR Committee. [...] The CSR Committee is in charge of identifying what measures to adopt in the Bank's various businesses. The Committee is chaired by the CEO and includes the heads of our Credit Management, Asset Management & Trading, and Private Banking divisions, as well as the head of Corporate Social Responsibility along with representatives from our business lines.

This report has been reviewed and approved by BCV's Executive Board and Board of Directors. It was prepared in compliance with Articles 964a, b, and c of the Swiss Code of Obligations;[3] as such, it will be submitted for shareholder approval at BCV's Annual Shareholders' Meeting as the Group's "report on non-financial matters." [...] Questions from our customers concerning sustainability are collected by the Corporate Communications Department, which drafts responses with the input of subject-matter experts at the Bank. Depending on the issue, responses may be submitted to our CEO for approval. [...] Recent developments in these areas are communicated to our CSR Committee, which determines whether we need to change any processes or take other measures. BCV maintains open dialogue with stakeholders in order to explain our policies and measures. [...] BCV also takes part in the annual CDP survey and received a B rating on climate issues in 2023, the organization's third-highest score.[2] [...] Starting with the 2024 financial year, we will publish a climate report that incorporates the concept of double materiality and follows the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Among other things, the report will include a discussion of the emissions generated in relation to BCV's lending and asset management activities.

## SRI governance

##### SRI roles and responsibilities

We have set up a dedicated governance structure in order to apply our SRI policy uniformly and consistently across our asset management activities.

**Corporate Social Responsibility Committee (CSR Committee)**
Our CSR ambitions and strategy are set by the Executive Board and approved by the Board of Directors.

The CSR Committee submits recommendations to the Executive Board on the objectives and approaches that BCV should adopt on all CSR-related topics. It is responsible for identifying and assessing sustainability-related opportunities and working with BCV's different departments to determine the measures we will adopt in each business line.

The committee is chaired by the CEO and includes the heads of our Asset Management & Trading Division, Credit Management Division, and Private Banking Division, as well as the head of Corporate Social Responsibility and representatives from the business lines in question.

**SRI Committee**
The SRI Committee has decision-making authority on SRI-related matters. It steers BCV's SRI policy, identifies priorities in this area, verifies that projects are consistent with each other, ensures that the SRI policy is implemented in our investment policy and methodology and approves our SRI documentation.
The SRI Committee is chaired by the head of our Asset Management & Trading Division and reports on its activities to the CSR Committee.

The SRI Committee collaborates with working groups and teams from the various business lines to grow our product offering, implement our SRI policy, and manage risks.

##### Shared understanding across the Bank

We take a number of approaches to managing socially responsible investments as part of our asset management activities. The Asset Management & Trading Division:

- ensures that all teams responsible for investments understand the various approaches we take, in particular by providing clearly defined SRI-related terminology;

- adopts a holistic approach so as to be able to assess risks in a variety of areas.

Explanatory documents (e.g., procedures, processes, and methodologies) must be clear, unambiguous, and available to all BCV employees.

This report has been reviewed and approved by BCV's Executive Board and Board of Directors. It was prepared in compliance with Articles 964a, b, and c of the Swiss Code of Obligations;[3] as such, it will be submitted for shareholder approval at BCV's Annual Shareholders' Meeting as the Group's "report on non-financial matters." [...] Questions from our customers concerning sustainability are collected by the Corporate Communications Department, which drafts responses with the input of subject-matter experts at the Bank. Depending on the issue, responses may be submitted to our CEO for approval. [...] Recent developments in these areas are communicated to our CSR Committee, which determines whether we need to change any processes or take other measures. BCV maintains open dialogue with stakeholders in order to explain our policies and measures. [...] In addition, BCV Group closely monitors FINMA publications and the expectations of the Federal Council in the area of sustainable finance, and Group entities take care to implement the applicable recommendations of industry organizations. [...] The CSR Committee is responsible for identifying and assessing sustainability-related opportunities and working with BCV's different divisions to determine the measures we will adopt in each business line. It helps identify sustainability risks, particularly those that may affect our reputation or that arise from our customers' evolving needs and expectations, and ensures that appropriate measures in this regard are taken. Additionally, the Committee monitors regulatory and market developments in the area of sustainability. [...] The CSR Committee also monitors any changes in our stakeholders' expectations. More information about how we engage with our stakeholders can be found starting on page 15. [...] Ways our governing bodies were involved in 2023: Our Executive Board and Board of Directors each convened twice to discuss how Articles 964a, b, and c of the Swiss Code of Obligations will affect our Group. These articles require us to, among other things, publish a report on ESG matters and submit the report to shareholders for approval at the Annual Shareholders' Meeting. [...] As they do every year, our Executive Board and Compensation, Promotions and Appointments Committee reviewed BCV's material topics (listed on page 13) with regard to sustainability and discussed the main risks concerning environmental matters, social issues, employee-related issues, respect for human rights, and combating corruption.

This report has been reviewed and approved by the Executive Board and by the Compensation, Promotions and Appointments Committee on behalf of the Board of Directors.[1] In addition to reviewing and approving the annual sustainability report, the Compensation, Promotions and Appointments Committee provides recommendations to the Board of Directors on CSR-related matters. [...] The Executive Board, which is responsible for economic, social, and environmental matters, has set up a CSR organizational structure consisting of: [...] • a CSR Committee, which submits recommendations to the Executive Board on the objectives and approaches the Bank should adopt on all CSR-related topics. The committee is chaired by the CEO and includes the heads of our Credit Management, Asset Management & Trading, and Private Banking divisions, as well as the Head of Corporate Social Responsibility along with representatives from our business lines. [...] • a Head of Corporate Social Responsibility, who reports directly to the CEO and oversees implementation of the CSR strategy across the Bank. [...] • designated CSR representatives at each of the Bank's business lines, who are in charge of further embedding sustainability into their operations and helping coordinate efforts across the Bank. They report on their progress to the CSR Committee. [...] The Compensation, Promotions and Appointments Committee conducts mid-year reviews of progress on CSR projects. This Committee also reviews the Bank's material topics and the main economic, social, and environmental impacts as part of the sustainability report preparation process, in accordance with GRI Standards (more information on how we identify material topics is given on page 15). [...] The CSR Committee is responsible for identifying and assessing sustainability-related opportunities and working with BCV's different divisions to determine the measures we will adopt in each business line. It helps identify ESG risks, particularly those that may impact our reputation or that arise from our customers' evolving needs and expectations, and ensures that appropriate measures in this regard are taken. Additionally, the committee monitors regulatory and market developments in the area of sustainability. [...] The CSR Committee also monitors any changes in our stakeholders' expectations by communicating with them through various channels. More information about how we engage with our stakeholders can be found starting on page 14. [...] Ways our governing bodies were involved in CSR in 2022 [...] • Our Executive Board, Compensation, Promotions and Appointments Committee, and Board of Directors discussed climate targets and how they relate to asset management and lending activities, along with net-zero initiatives for the finance industry. [...] • Our Executive Board met to discuss how the Swiss Bankers Association's new guidelines – both on addressing the question of energy-efficiency renovations in home-financing advice with clients and on incorporating ESG criteria into investment guidance – will affect BCV. The Executive Board outlined an action plan for each business line concerned by the guidelines. [...] • Our Board of Directors met for a half-day to discuss and receive training on key issues and trends in sustainable finance and what they mean for BCV. [...] • Our Executive Board and Audit and Risk Committee met several times to review recent developments in the area of socially responsible investing – especially the risks associated with greenwashing – and discuss how BCV will respond.

BCV's Board of Directors reviews and approves the Bank's CSR strategy and objectives. It also reviews and approves the sustainability report and this policy. [...] The Bank's Compensation, Promotions and Appointments Committee supports the Board of Directors in its duty of high-level oversight, particularly in the areas of CSR and governance. Twice a year, the Committee reviews the Bank's progress on implementing the CSR strategy, including with regard to targets and the preparation of the sustainability report. It also reviews the Bank's material topics as part of the process of preparing the sustainability report, in accordance with the GRI Standards. And it reviews and provides input on the sustainability report for the Board of Directors. [...] The Audit and Risk Committee is tasked with ensuring the application and operation of risk control and management at BCV, including for climate-related risk. It assists the Board of Directors in assessing the risks faced by BCV, and in organizing the Bank's risk-management and control processes. This Committee also oversees the limited assurance procedures applied to the sustainability report. [...] BCV's Corporate Social Responsibility team, which reports directly to the CEO, coordinates and oversees implementation of the CSR strategy across the Bank. This team regularly submits reports to the Executive Board on the different projects being carried out at the Bank as part of the CSR strategy. [...] Designated CSR representatives at each of the Bank's business lines are in charge of further embedding sustainability into their operations and helping coordinate efforts across the Bank. They propose their roadmaps, which encompass risks, opportunities, and impacts, and report on their progress to the CSR Committee. [...] The CSR Committee is in charge of identifying what measures to adopt in the Bank's various businesses. The Committee is chaired by the CEO and includes the heads of our Credit Management, Asset Management & Trading, and Private Banking divisions, as well as the head of Corporate Social Responsibility along with representatives from our business lines. [...] The Executive Board's Risk Management Committee monitors the Bank's risk profile. It ensures the Bank's main risk factors and exposures, including those related to the climate, are taken into consideration in these processes.

Attach commitment or position statement(s)[…]Our sustainability report, page 21 shows our initiatives and membership.

As part of our mission as a cantonal bank, we aim to maintain our position as the bank of choice for the people and businesses of Vaud Canton and as a key player in the Swiss banking sector. As such, we are committed to working for the sustainable development of society.

We do not take positions on political issues, except for matters that concern the banking industry or that could have a material impact on our business environment.

BCV is a member of the Swiss Bankers Association (SBA) and the Association of Swiss Cantonal Banks (ASCB), two umbrella organizations that represent the interests of the Swiss banking industry and Swiss cantonal banks, respectively. We are also a member of swisscleantech, an organization that engages in advocacy both within the political sphere and the private sector for Switzerland's target of achieving carbon neutrality by 2050.

We also take (and publish) concrete ambitious actions. For instance:
Under the Sustainable Development Scenario, global coal use needs to be reduced in order to meet the emissions target set out in the Paris Agreement. In 2019, we set a slightly more ambitious phase-down rate based on International Energy Agency (IEA) publications.

In 2020, we changed the scope of transactions involving thermal coal used in energy production. We now focus on transactions supplying coal to countries in the developing world that are at a disadvantage in the energy transition. That's because in those countries, coal is a cheap energy source that accounts for much of the energy mix and will be particularly difficult to quickly phase out.

We reached out to the clients affected by these changes, explaining our decision to reduce our exposure to coal and focus our financing on developing countries that face greater challenges making the energy transition. We also explained how that decision fit into BCV's sustainability strategy.

The IEA's most recent report states that coal use must fall by 55% by 2030 in order to achieve net zero emissions by 2050. For that to happen, global coal use needs to be reduced by 6.1% each year starting in 2022.36

In 2020 and 2021, we hit our target of reducing our exposure to coal by 4.5% per year. And for 2022, we have set an even more ambitious target of cutting our exposure by 6.5% compared to 2021 levels – again going above and beyond the recommended amount .

Describe the process(es) your organization has in place to ensure that your engagement activities are consistent with your overall climate change strategy[…]Membership of associations is decided by our Excecutive committee. Four members of the Executive Board are also members of the CSR Committee. Consequently, memberships decisions are made taking into account the Bank's CSR strategy and climate objectives.

We are members of the following initiatives and associations

The Swiss Bankers Association
The Swiss Bankers Association (SBA) took position on sustainable finance stating that : "SBA is convinced that international net-zero alliances are an effective instrument for achieving national and international climate and sustainability goals. It therefore recommends its members to join the alliances that are suitable for them. The SBA itself joined the Net-Zero Banking Alliance in April 2022, with supporter status. This engagement highlights the finance sector's pivotal role in the transition towards a more sustainable, climate-friendly economy and society."
((https://www.swissbanking.ch/en/news-and-positions/opinions/net-zero-alliances-an-essential-tool-for-supporting-climate-goals))

PRI
BCV is a signatory of the United Nations Principles for Responsible Investment (UNPRI), which seek to promote a sustainable financial system. The UNPRI are the most comprehensive and widely recognized standards for responsible investment.

SSF
BCV is a member of Swiss Sustainable Finance, which aims to strengthen Switzerland's position as a hub for sustainable finance by raising awareness, building up skills in the area, and supporting concrete action.

Swisscleantech
BCV is a member of swisscleantech, an organization that promotes a climate-compatible economy by uniting the efforts of policymakers, businesses, and society.

Does your organization have a public commitment or position statement to conduct your engagement activities in line with the goals of the Paris Agreement?[…]Yes

Describe the process(es) your organization has in place to ensure that your external engagement activities are consistent with your climate commitments and/or climate transition plan?[…]BCV is a member of the Swiss Bankers Association (SBA) and the Association of Swiss Cantonal Banks (ASCB), two umbrella organizations that represent the interests of the Swiss banking industry and Swiss cantonal banks, respectively. BCV's CEO sits on the boards of directors of both the SBA and the ASCB.