On June 15, 2022, we attended the Annual General Meeting of Bank Pekao S.A. The meeting was attended by our representative, who asked the board of directors questions about the bank's climate strategy. At the same time, a protest of the Foundation combined with a performance was held in front of the headquarters. Artist Arek Pasożyt painted a picture symbolizing Pekao's commitment to dirty fossil fuels.

This is how the board's answers were commented by our financial specialist, Jan Chudzyński:

— Bank Pekao SA has been criticized for years for its lack of any declaration or specified timeline for ending its financing of the coal and gas sectors. He justified his inaction in this area - very unconvincingly - by the events of the past few or so months. Answering questions at the AGM on these issues, the deputy chairman of the board cited the complicated international situation as the reason for maintaining such a state of affairs. As he added, only after the situation stabilizes will Pekao SA be able to... start working around the topic of discontinuing financing.
The bank's representatives did not address at all the issue of estimating Pekao SA's Scope 3 greenhouse gas emissions, included in the other two questions - another area in which Pekao SA stands apart from its competitors, as well as the issue of requiring its customers to declare and strategize to achieve climate neutrality.
Such an attitude and its translation by Poland's second largest bank in terms of assets is not only outrageous but, above all, contradictory to the actions necessary to reduce greenhouse gas emissions at an appropriate pace. —

Here are our questions posed at the AGM:

In the 2021 Board of Directors Report, you can read that the Bank supports a gradual and orderly transition to a low-carbon economy, by reducing the financing of energy production from fossil fuels, i.e. oil, gas and coal. I would like to ask what this means in practice:

1. Has there been a change in Bank Pekao SA's lending policy in the area of financing high-carbon sectors in 2021?

In addition to the exclusion of financing new mines and power plants, are there any other exclusions, following the example of other banks in Poland, for financing the coal sector?

2. Among fossil fuels, gas is not mentioned, in addition to coal and oil. What is the policy towards oil and gas?

Does Pekao SA Bank plan to set a pace or a date for the complete termination of financing for these sectors?

3. The Report states that "calculation of emissions in the value chain, i.e. Scope 3, is planned to be carried out in 2023."

The report does not provide any estimates for Scope 3 emissions.

Were there any estimates for Scope 3 emissions at Pekao SA Bank in 2021?

As a reminder, scope 3 includes emissions that are primarily related to the bank's lending business, and this is the main source of emissions for financial institutions.

4. With reference to the estimates of Scope 3 emissions:

Has Pekao SA bank identified or is it planning to identify restrictions on financing companies that do not themselves have a designated path to climate neutrality?

Is the Board of Directors not concerned that the lack of such a strategy in companies financed by the bank will make it difficult for Pekao SA to plan a path to neutrality?

Below are the answers of the Vice President of the Board of Directors, Paweł Strączyński:

Moving on to questions related to emissions, I let myself speak because, as you know, I have a lot of experience in the energy sector. And here I personally take part in a lot of work related to the policy of banks when it comes to the high and low emission sector. If I could ask, I will try to answer all the questions asked here by the attorney.

Last year, in our ESG strategy, we stated very clearly that we would like to reduce our exposure to high-carbon sectors to less than 1% of the portfolio by 2024. This is what we are doing, however, taking into account this complicated situation we have been dealing with since the end of February this year. Because the current reality has changed a lot, when it comes solely to gas financing, for example - we have already dealt with three situations in a short period of time. The first was the situation before the outbreak of the war, where gas was clearly indicated as a transitional fuel in the transition process.

After February 24 or 25, it turned out that the European Commission started a dialogue on the role of gas in the transition process, I may not quote, but I will refer to the statement of Vice-President Franz Timmermans, who 3 days after the outbreak of the war said publicly as an EU official that it was, however, coal that should be the transition fuel in the current difficult situation, that no longer gas, but coal.

Another change in the situation, from yesterday, where the European Commission's proposals to write a taxonomy into the delegated act, in terms of nuclear power and gas indicated that an agreement to accept nuclear power and natural gas as low- or zero-carbon sources is close - yesterday's information from the European Parliament that another attempt was made to withdraw gas and nuclear power from the taxonomy that is to say, we are back to the point of last year.

And we, of course, as a bank, our goal is to implement our ESG policy, to engage in low- and zero-emission projects, but we also pay attention to what is happening in the EC, especially in terms of legislation, as well as looking at the situation of the Polish economy and the Polish power system as a significant part of the Polish economy. We do not have precise dates, whether to exit the coal sector or exit the gas sector, because today with such a complicated situation it is impossible to give such dates.

So, once the international situation has stabilized, we will also want to address how we see the immediate, short-term and this longer-term future, and then we will naturally be able to start working on the topic, whether in terms of exiting or ceasing funding - I can't yet say today in which direction this would go, but we are certainly going to undertake such work. I hope that my answer exhausts the attorney's questions.

A rebroadcast of the general meeting can be found at this link:

http://n-22-10.dcs.redcdn.pl/file/o2/GPWMedia/video/mp4/20220615_pekao_wza_pl.mp4

Photo gallery of the event:

https://www.flickr.com/gp/194228272@N03/247Q778P84