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E1-2
Policies related to climate change mitigation and adaptation
The PZU Group is proceeding in line with existing policies related to climate change mitigation and adaptation implemented at the central level and by individual PZU Group entities. These documents cover the following areas:
- climate change mitigation – by reducing greenhouse gas emissions in operations, investment portfolios and insurance products, taking into account the ambitions expressed in the PZU Group Decarbonization Strategy;
- climate change adaptation – by developing products and services to support customers in managing climate risk and increasing the organization’s resilience to physical risks and transitions;
- energy efficiency – by implementing technological and organizational solutions that reduce energy and fuel consumption in buildings and operational processes and by ensuring digitization;
- use of renewable energy – by supporting investment in green technologies, purchasing energy with guarantees of origin, as well as investing in and developing our own RESs;
- management of climate risks and opportunities – by systematically identifying and assessing climaterelated risks and opportunities, including using scenario analysis;
- awareness raising – by engaging in educational efforts and communication aimed at employees, customers and business partners.
Instead, there are area-based policies developed and documented to support climate change ambitions and measures, tailored to the type of activity and market in which they are implemented, among others:
- PZU Group Sustainability Policy – the basic document in the PZU Group describing how PZU Group entities work together, including in the area of climate change mitigation and adaptation;
- PZU Group’s Environmental Policy – the document describes measures aimed at reducing environmental impact, while simultaneously considering the energy transition and a broad approach to sustainability;
- Bank Pekao’s Strategy for 2025-2027, Credit Risk Strategy, Credit Risk Policy, and Sustainable Finance Framework – the documents define the Bank’s comprehensive approach to integrating ESG factors, including climate risk, into its lending and investment processes, including the identification of high-emission portfolios with mitigation of their financing, the development of ESG risk assessment tools, the implementation of green financing limits, and a framework for financing sustainable projects in line with the technical criteria under the EU Taxonomy;
- Environmental Policy at Armatura Kraków – based on the PZU Group Environmental Policy mentioned above, this document is complemented by important aspects of the value chain specific to Armatura Kraków, including the production and product design process;
- Sustainable Investment Policy (for PZU, PZU Życie and TFI PZU) – the document outlines the ambition to allocate capital in accordance with ESG criteria and reduce exposure to high-emission sectors;
- Alior Bank S.A. Sustainable Financing Policy and Principles of Financing Business Customers – the documents define the processes for identifying, assessing and quantifying ESG risks, and impose restrictions or exclusions on financing activities that may have a negative climate impact;
- Environment Protection Policy, Sustainability Policy and Risk Management Strategy at AAS Balta – the documents together integrate climate issues with efforts to reduce emissions, adapt to climate change, ensure energy efficiency and promote specific investments;
- PZU Group Decarbonization Strategy – the basis for the PZU Group’s approach to climate policy, setting directions for the PZU Group’s future decarbonization goals;
- Sustainable Development Policy at Lietuvos Draudimas AB – the document defines actions for emissions reduction, climate change adaptation, energy efficiency improvement and stakeholder education.
The aforementioned documents are subject to appropriate corporate approvals, including by management boards and, potentially, supervisory boards; whether they are up to date is an issue monitored as part of the ongoing operational tasks of the business owners assigned to them.
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E1-3
Climate change mitigation and adaptation measures
The PZU Group continues to implement and develop activities to support the transition to a low-emission economy. At their core is the reduction of greenhouse gas emissions both in the portfolio and within the company’s own economy, the improvement of energy efficiency, and the development of products and services that help customers and society adapt to the effects of climate change.
These activities include key business areas from the PZU Group's perspective – own investments, insurance product design, business banking, as well as the optimization of operational processes. The common denominator is the desire to reduce the carbon footprint and promote sustainable development.
The PZU Group has not yet determined how to manage the negative impacts associated with insuring highemission entities due to the focus of its approach on providing access to the products needed for an orderly transition. Consequently, by offering insurance coverage to entities in the mining and power sectors, the PZU Group supports their role in the transition to a net-zero economy.
Physical and transition risks, in turn, are managed through processes for assessing the portfolio’s exposure to natural phenomena and designing, on an annual basis, reinsurance programs that reduce the impact of catastrophic events. Adjusting terms and conditions, as well as pricing reinsurance products and programs is an integral part of the product management process that allows the PZU Group to respond to the changing risk profile associated with climate change.
The PZU Group is developing product offerings that support the energy transition or that are designed for net-zero and low-emission sectors, developing consulting and prevention services, and implementing damage prevention programs – e.g., weather risk monitoring, and early warning systems.
The PZU Group has a range of products to support the energy transition and climate resilience. In this regard, insurance is offered in particular for sectors that support the transition to a low-emission economy, with photovoltaic installations, wind farms or water plant networks. The PZU Group’s portfolio includes a variety of products tailored to customers’ needs and to the specific nature of the market in which PZU Group entities operate. These include: “PZU Wind Power” and “Power of the Wind”, “PZU Solar Power” and “Power of the Sun”, “PZU Eko Energia”, “PZU for Housing Communities and Cooperatives” and “PZU Bezpieczne Lokum”.
Environmental liability insurance is also offered for environment damage. It is intended for entities using the environment within the meaning of the Act of 30 April 2007 on the Environmental Damage Prevention and Remedy. The scope of insurance covers the liability for environmental damage, including the costs of actions taken to repair or replace in an equivalent manner natural elements or their functions, as well as the costs of actions taken to prevent or reduce environmental damage.
In addition, the PZU Group is taking steps to adapt further products on offer to the requirements of the EU Taxonomy, through which climate change adaptation or mitigation is supported. The product portfolio includes commercial and motor insurance and is aimed at corporate clients, small and medium-sized enterprises and individual customers.
A broader description of insurance products that meet the requirements of the EU Taxonomy is included in the section on taxonomy disclosures of the PZU Group.
The PZU Group aspires to participate in the project to protect Poland’s future nuclear power industry. Having initiated the establishment of the nuclear insurance pool, which is a consortium of Polish insurers that will provide coverage for the nuclear power industry in Poland, the PZU Group is taking steps to be a leader in the area of nuclear investment insurance. TUW PZUW is expected to be the technical organizer of the risk assessment effort, finding suitable insurance capacities, underwriting and settling this project, as well as preparing procedures related to claims handling.
Investment decisions account for their main adverse impacts on sustainability factors, understood as environmental, social and labor issues, human rights issues and anti-corruption. The aforementioned factors are taken into account:
- if this does not contradict the investment objectives, investment diversification principles, and other investment restrictions, or the investment selection criteria and the adopted benchmarks and reference rates;
- only if this does not adversely impact the expected return on the portfolio and the ratio of expected portfolio profits to portfolio risk;
- with the proviso that the ability to take into account the main adverse impacts of investment decisions on sustainability factors is limited or excluded with respect to products with specific investment policies, e.g., products in which funds may be invested only in specific financial instruments.
The PZU Group pursues activities related to participation in debt financing consortia. Under these consortia, borrowers are encouraged to invest funds in areas related to climate protection, social activities or other socially useful initiatives, including through margin adjustment mechanisms that depend on the achievement of KPIs for ESG-linked financing. Debt instruments that either support sustainable development or the terms of issuance of which are linked to ESG goals are also used.
Approximately 90% of the investment property portfolio overseen by PZU has sustainability certificates, and another 4% is in the process of obtaining them. At the same time, investments were made to increase the energy efficiency of the buildings in the portfolio, such as to install reactive power compensation, upgrade HVAC systems and replace lighting with LEDs. The criterion of having or acquiring an environmental certificate is also an important element in the decision to purchase office and warehouse properties.
Taking into account the specific nature of financial institutions such as the Pekao Group and Alior Group, these groups are implementing their own approaches to investment activities in sustainability financing. They are related to support for energy transition and investments, including those of an environmental nature.
Banking activities were conducted to support the customers’ energy transition. Within the Pekao Group, in the reporting year, financing was provided for, i.a., RES and low-emission transport with a total value of PLN 8.492 billion. In addition, the goals set in the Bank Pekao S.A. Group Transition Plan are based on specific planned decarbonization measures. In particular, in the next few years, they will consist in engaging in targeted financing of transitional generation technologies based on natural gas, which will include increasing the balance sheet commitment to natural gas to 24.7% in 2030 and in maintaining a high commitment to targeted financing of net-zero generation technologies based on wind and solar power (planned balance sheet commitment to exceed 40% of the total commitment in the electricity sector).
In the case of the Alior Group, efforts continued to increase the share of sustainable transition products to above 10% of new sales in the Business Customer segment by 2027. In addition, flexible financial instruments were offered to enable entrepreneurs to invest in solutions that promote emission reductions and increase the share of renewable energy in the energy mix. The Alior Group also made low-interest loans available for, among others, installing or expanding RES installations, which were an important part of supporting the energy transition in the SME sector.
From the PZU Group’s perspective, activities to reduce its carbon footprint, within the framework of its own operations, are non-material in terms of the total impact on greenhouse gas emissions. This is because the dominant source of emissions lies in other areas mentioned earlier, such as the investment portfolio and insurance business, and the potential reduction in the operational area does not significantly reduce the PZU Group’s carbon footprint. Nevertheless, a number of sustainable initiatives are being undertaken, as outlined below.
Entities in the PZU Group are carrying out decarbonization activities, which include upgrading office or business-related infrastructure by implementing energy efficient solutions such as LED lighting, energy management systems, reactive power compensators, lower-emission refrigerants and highefficiency boiler replacements. To the extent possible, PZU Group entities are gradually increasing the share of renewable energy in their consumption, taking measures to reduce the use of water, paper and consumable materials. Measures are also being taken to reduce and replace the vehicle fleet with net-zero or low-emission vehicles.
Educating employees and customers about sustainability is an integral part of the aforementioned activities – training courses, webinars and educational campaigns promoting the PZU Group’s carbon reduction efforts are being implemented.
Climate change mitigation and adaptation resources
In the reporting year, the PZU Group did not have organizational or budgetary resources dedicated exclusively to climate change mitigation. Activities in this area were carried out as part of ongoing operational and strategic processes, without separate structures for this purpose. The aforementioned activities were carried out by units and structures that had competencies assigned to them, including under relevant organizational regulations, at the level of individual entities in the PZU Group.
The PZU Group calculates greenhouse gas (GHG) emissions in Scope 1, 2 and 3 using appropriate analytical tools, presenting any achieved emission reductions in section E1-6. With no ESRS-compliant decarbonization targets set at the PZU Group level, expected emission reductions are not disclosed as required by the ESRS.
In the reporting year, no significant capital expenditures or operating expenses (CapEx and OpEx) related to decarbonization activities, including solutions based on natural resources, were recognized separately.
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E1-4
Climate change mitigation and adaptation targets
The PZU Group’s Strategy for 2025-2027, “With Confidence into the Future”, sets out, among others, environmental targets to strengthen the PZU Group’s resilience in the face of climate change. Its assumptions are to be implemented in several lines of business, i.e., by reducing CO2e intensity in corporate insurance, banking, and investments; financing projects that support the green transition; and taking into account the impact of climate change on claims in price-setting. The desired outcome of these activities is reducing by 23% CO2e emissions in the corporate insurance portfolio in terms of declared emissions by key corporate clients by 2030, as well as expanding product assessments and including the identification of ESG factors in them.
This strategic ambition does not meet MDR-T requirements, and an MDR-T-compliant goal has not yet been developed and formalized. The indicated reduction in CO2e emissions is based on the assumptions set forth in the PZU Group’s Decarbonization Strategy. It sets targets for the PZU Group’s three key business areas: non-life insurance, own investments and business banking. In implementing the targets and objectives arising from the aforementioned documents, in 2025, in specific areas, the PZU Group focused primarily on preparations and activities to allow their reporting in the future, in accordance with the ESRS requirements. In order to ensure transparency of information and actions taken, the following section describes them in terms of each component of the value chain.
Within its property insurance line, the PZU Group focused, as a continuation of the previous year, on individual motor insurance and commercial insurance covering corporate clients and small and medium-sized enterprises. While in motor insurance, no measurable emission reduction target is planned for the time being due to market conditions beyond the control of the PZU Group, in commercial insurance, in the view of the previously stated ambition to reduce Co2e emissions in the corporate insurance portfolio, preparatory measures have been taken to achieve this goal. Due to the early date of publication of these statements, the PZU Group does not have access to the necessary data which would allow calculating the reduction index during the reporting period.
One of the goals of the PZU Group’s Strategy for 2025- 2027, “With Confidence into the Future” is to allocate PLN 3 billion for new investments in green transition and innovation by 2027. In 2025, PLN 917.5 million was achieved in this target. Activities in this area are implemented by PZU, PZU Życie and TFI PZU (through closed-end investment funds for non-public assets (FIZANs) managing the Group’s own funds). The target does not meet MDR-T requirements.
The scope of business banking in the PZU Group is covered by the Pekao Group and the Alior Group. The PZU Group’s decarbonization strategy defined this area conditionally, pointing to the full autonomy of the banking groups in the final determination of potential targets.
Consequently, assumptions regarding the reduction of emission intensity set forth in the strategy provided a non-binding starting point for the Pekao Group and the Alior Group to set their own transition goals and plans. As a result of the above, and taking into account the EBA’s Guidelines on the management of ESG risks which expect banks to have a transition plan as a tool for transition risk management, the assumptions made in the PZU Group’s Decarbonization Strategy regarding the reduction of emission intensity for business banking lines ultimately did not provide a starting point for the banking groups to develop such plans. Notwithstanding the above, the Pekao Group has set a quantitative target of PLN 9 billion in its 2025-2027 strategy to finance its loan portfolio and investments in new projects which will include RES, low-emission transport, and energyefficient construction, among others. This target was met at 94% in the reporting year. In addition, the Pekao Group has set goals related to climate change mitigation, to be achieved by 2030, in the Bank Pekao S.A. Group Transition Plan. These include reducing emissions in own operations by 61% in Scope 1 and 2 – market-based (60% location-based) and financed emissions (Scope 3 Category 15) from the electricity sector (by 39.5%) and residential real estate sector (by 43.4%). Detailed information on the base year, target reductions and other data required for ESRS-compliant targets, as they are targets adopted at the Pekao Group level, are available in the Pekao Group’s sustainability reporting.
For the Alior Group, the quantitative goal being pursued is to achieve more than a 10% share of sustainable transition products in new sales to business customers by 2027. At the same time, systemic management of ESG risks in the loan portfolio has been adopted as an environmental objective, as a result of which the plan is to maintain the maximum limit of credit exposures classified as exposures with high ESG risk at the level of up to 1% in a 10-year perspective. The Alior Group, as part of reducing the carbon footprint of its own operations, has also set a goal of purchasing 100% of its electricity with guarantees of origin, pledged to achieve climate neutrality by 2050, and committed to preparing a transition plan by 2027.
