In response to directives by our Board of Directors in early 2021, the Bank established an ESG management level working group comprised of senior leaders from key areas[1] within the Bank. The ESG Working Group was charged with developing a governance approach to address ESG considerations, to engage internal stakeholders to improve our understanding of emerging and evolving ESG requirements, and to coordinate with management to develop a strategy to help us navigate through the evolving ESG landscape with respect to climate-related risk issues. [...] During the second half of 2021, we focused on gaining a better understanding of climate change risks and developing a governance structure that allows us to coordinate across the enterprise on the identification and assessment of ESG-related risks and opportunities. [...] The ESG Working Group has been meeting monthly in 2022 to continue to facilitate and coordinate these efforts. [...] The Bank's Board of Directors had designated its Risk Assessment Committee as the board-level committee for overseeing climate-related risks. [...] The full Board receives periodic updates on climate and ESG-related topics. [...] To enhance governance over climate-related risks and opportunities, the Bank plans to: • Develop formalized processes to inform and receive approval from the Board on climate related matters. • Formalize the ESG Management Committee to provide oversight and support senior leadership over all ESG matters. • Incorporate climate-risk in the Bank's processes for determining the Bank's risk appetite. • Further integrate climate risk into our risk policies and governance frameworks. • Increase the frequency and depth of Board and senior-management-level reporting and engagement on climate related matters. • Develop formalized processes to monitor progress against established climate-related goals and objectives. [...] The ESG Working Group is responsible for developing a governance approach for all ESG matters. [...] The Environmental and Climate Change Working Group, a sub working group of the ESG Working Group, is responsible for developing the climate-related risk strategy, assessing risk exposure and opportunities, and integrating climate-related risks into the risk management framework. [...] The Board views oversight and effective management of ESG related risks and opportunities as important to the Bank's ability to execute its climate risk strategy and achieve long-term sustainability goals. In addition to oversight by the full Board, the Board coordinates with its various Committees to ensure active and ongoing Committee-level oversight of the Bank's management of ESG-related risks and opportunities. [...] The Risk Assessment Committee oversees the Bank's risk management framework. Its primary responsibilities include oversight as it relates to risk appetite and the policies and procedures used to manage various risks, including ensuring that risk is appropriately identified, measured, mitigated, monitored, and reported appropriately within an established governance framework. [...] In February 2021, the Committee's responsibilities were expanded to include oversight of climate risks to enhance the Board's oversight of risk management activities related to climate risk at the Bank. The Risk Assessment Committee receives periodic updates on climate-related risks and activities from the CRO and the General Counsel, as it relates to legal and regulatory developments. [...] The Bank has enhanced our commitment to ESG, including climate-related objectives by expanding the involvement of executive management with the Board designating the CRO[8] as the member of executive management responsible for overseeing climate risk at the Bank. Under the guidance of the CEO, the CRO, in collaboration with the General Counsel and the Director of Investor Relations, established a management-level ESG Working Group to develop a governance approach to address ESG considerations, including climate change risk. The ESG Working Group established three sub-working groups in 2022 to coordinate the Bank's resources along the "E", "S", and "G" areas, which are: - Environmental and Climate Change Risk Working Group - Social and Corporate Responsibility Working Group - Governance and Reporting Working Group [...] The CEO has appointed an officer to lead the Bank's sustainability and ESG initiatives, reporting directly to the CEO. [...] We intend to reconstitute the ESG Working Group into the ESG Management Committee, with the following key responsibilities: - Oversee ESG and risk strategy framework development. - Oversight of enterprise-wide approach to manage and report on risks and controls related to ESG and climate related issues. - Report on objectives and progress related to the Bank's ESG goals, risk escalations, and general ESG topics in order to facilitate Board, CEO and management committee oversight. [...] The Bank intends to further align with the TCFD Recommendations and is planning to set up more formalized processes to engage with the Board and Board Committees on climate-related issues. These may include: - Establishing the management-level ESG Management Committee to report to the Board on ESG matters. - Reviewing and guiding our climate risk strategy, major plans of action, risk management policies, annual budgets, and business plans. - Setting performance objectives and monitoring implementation and performance. - Overseeing related major capital expenditures, acquisitions, and divestitures. - Facilitating training to enhance the Board's risk oversight. - Establishing how the Board will monitor and oversee progress against goals and targets.