Banque Cantonale Vaudoise : BCV’s Sustainability Policy

BCV's Sustainability Policy

May 2024

1. Introduction

1.1 Purpose

This document describes the sustainability-related guidelines and principles that Banque Cantonale Vaudoise¹ ("BCV" or "the Bank") has adopted in its business lines and operations.

1.2 Document governance

This policy was put forward by our Corporate Social Responsibility Committee (CSR Committee) for review by the Executive Board, and presented to the Compensation, Promotions and Appointments Committee for its input. The policy was then submitted to the Board of Directors for approval. The CSR Committee reviews the policy every year and submits any changes to the aforementioned bodies for approval.

1.3 Scope of this policy

This policy covers our material topics with regard to sustainability, which are determined by taking into account stakeholder expectations and our main impacts and risks in relation to environmental, social, and governance (ESG) issues.

The following documents supplement the policy and provide additional information:

• Our risk management policy and strategy (internal document) describes the Bank's risk appetite and our risk-management framework. It includes climate-related risks.
• Our socially responsible investment (SRI) policy (public document²) presents BCV's principles in incorporating ESG criteria into our asset management practices.
• Our lending policy (internal document) sets out the principles that BCV follows in granting and managing loans, i.e., for all commitments that involve credit risk. This relates in part to our sector exclusion list, to make sure we only finance projects that are consistent with our sustainability strategy and our ethical principles.
• Our Code of Professional Conduct (public document³) sets out the behavior that is expected of our company as a whole, its governing bodies, and each and every staff member. This key document for BCV discusses ethics and governance at the Bank and our efforts to fight corruption.

¹ BCV Group parent company

• Socially Responsible Investment (SRI) Policy, January 2023³ Code of Professional Conduct

2. Sustainability at BCV

As a full-service bank with solid local roots, 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.

Our approach to sustainability is aligned with the United Nations (UN) Sustainable Development Goals.⁴ We strive to work toward them across all our activities.

We also intend to put into practice the Swiss federal government's commitments under the 2017 Paris Agreement, which aims to "hold the increase in the global average temperature to well below 2°C above pre- industrial levels and [...] make finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development."⁵

At BCV, we believe it's essential to uphold internationally recognized human rights, in line with the UN Guiding Principles on Business and Human Rights⁶ and the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work.⁷

Sustainable development is written into our articles of association⁸ and the Cantonal Act Governing BCV (LBCV).⁹ Since 2007, the LBCV has specified that, in our role as a cantonal bank, we will "have particular concern for the development of the Canton's economy, in keeping with the principles of economically, environmentally, and socially sustainable development." The various dimensions of sustainability are thus an integral part of our business model, across all of our activities.

• UN Development Programme,Sustainable Development Goals⁵ Paris Agreement, Article 2
  ⁶ UN, Guiding Principles on Business and Human Rights, 2011
  ⁷ International Bill of Human Rights, 1966; International Labour Organization Declaration on Fundamental Principles and Rights at Work, 1998
  ⁸ Articles of Association of Banque Cantonale Vaudoise,Article 4 ⁹ The Cantonal Act Governing BCV (LBCV)

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3. Ambitions and strategy

Our ambitions and strategy when it comes to CSR are a direct product of our mission to contribute to the sustainable development of Vaud Canton. They are set by our Executive Board, approved by the Board of Directors, and together form BCV's sustainability roadmap. Between now and 2025, we aim to help achieve the UN Sustainable Development Goals by:

• guiding our customers towards investments that incorporate ESG criteria and progressively gearing portfolios towards the goals of the Paris Agreement, the Swiss government's commitments, and the Vaud climate plan
• playing a major role in financing the energy transition in Vaud Canton
• committing to preserve the environment and continuing to reduce the environmental footprint of our operations
• fulfilling our social responsibility by playing an active role in the community
• as a benchmark employer, working to achieve equity in the workplace and fostering diversity and equal opportunity.

We have built our stakeholders' expectations into our CSR strategy, taking into account the means at our disposal. We also set quantitative objectives, subject to the approval of our Board of Directors. Current objectives are shown in section 7 of this document. The climate targets we are currently developing in the areas of mortgage lending and asset management are in line with Switzerland's targets.

We transparently report on the measures we take and our progress towards our goals, in accordance with the Global Reporting Initiative (GRI) Standards and with Article 964a, b, and c of the Swiss Code of Obligations. 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).

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4. Initiatives and organizations

BCV is a member of the Swiss Bankers Association (SBA) and the Association of Swiss Cantonal Banks (ASCB), and our CEO sits on both of their boards of directors. Our position on climate, energy, and other sustainability matters is in alignment with the approach taken by these industry organizations.

We are also involved with other organizations whose mission is to address sustainability-related challenges. These include Swiss Sustainable Finance (SSF), swisscleantech, and Swiss SRI specialist Ethos. We also have a partnership with the University of Lausanne to promote research on the integration of ESG criteria into real-estate investments in Switzerland.

We are a signatory to the United Nations Principles for Responsible Investment (UNPRI), which seek to promote a sustainable financial system. We are also a signatory to the Partnership for Carbon Accounting Financials (PCAF), a global partnership that brings together businesses (mainly financial institutions) to implement a harmonized approach for accounting for the greenhouse gas (GHG) emissions associated with their operations. This approach to accounting and reporting is designed to help financial institutions measure and assess the GHG emissions associated with their lending and investments. Lastly, we are a signatory to Climate Action 100+, an investor-led initiative to ensure the world's largest corporate greenhouse gas emitters take necessary action on climate change.

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5. Sustainability governance

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 Executive Board is responsible for implementing BCV's CSR strategy.

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 and preparing 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 Board of Directors is responsible for high-level oversight of the Bank's risk profile and monitors the Bank's main risk factors, including those related to environmental matters, social issues, employee-related issues, respect for human rights, and combating corruption.

The Audit and Risk Committee is tasked with ensuring the application and operation of risk control and management at BCV, including for climate- related risks. 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.

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6. Organizational structure

BCV's head of Corporate Social Responsibility, who reports directly to the CEO, coordinates and oversees implementation of the CSR strategy across the Bank. The head of Corporate Social Responsibility 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 and 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.

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7. Sustainability topics and principles

7.1 Environment

CO2 emissions and energy consumption

Emissions linked to BCV's lending and investment activities will be reported starting with the 2024 financial year.

CO₂ emissions associated with our operations (i.e., excluding lending and investment activities) fall within scopes 1, 2, and 3 under the Greenhouse Gas Protocol. They stem mainly from building management, business travel and commuting, and procurement. We assess our carbon footprint every year. This information gives us a broad picture of how we are impacting the environment, how our impact is changing, and what we can do to reduce it.

Quantitative objective: We aim to lower our scope 1, 2, and 3 emissions (excluding in our lending and investment activities) at a pace consistent with the Swiss federal government's goal of reaching net-zero by 2050. We have also set an interim target of shrinking our carbon footprint by 35% from

2019 levels between 2021 and 2030. We arrived at this figure after reviewing all our emissions sources to see where we could reduce our footprint, taking benchmark CO2 scenarios into account.

Alongside this, we developed an action plan that sets out the measures needed for our buildings and creates a framework for setting up an employee commuting and business travel plan. We are also moving ahead with measures to cut back on printing and reduce our IT-related impacts.

We aim to reduce our electricity consumption through energy-saving measures and behavior. We also support the development of renewable energy, in part by installing solar panels on the buildings the Bank owns.

Finally, we back climate-change mitigation projects that take a holistic, long- term view of sustainability.

Procurement

BCV pays close attention to the environmental impact of the goods and services it sources. We make it a point to carry out our purchases in Vaud Canton as much as possible, where our suppliers are subject to Switzerland's stringent standards for protecting the environment, for example with respect to pollution. The environmental and social criteria that guide our sourcing practices are based on recommendations issued by recognized bodies.

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7. Sustainability topics and principles

7.2 Society

Supply chains and human rights

BCV is especially mindful of internationally recognized human rights standards, including the fundamental principles and rights at work published by the International Labour Organization (ILO). We also pay close attention to the social impact of the goods and services we source.

The overwhelming majority of the Bank's procurement spend goes to service providers in Switzerland, reflecting our position as a Swiss company active in the tertiary sector. In accordance with Switzerland's Ordinance on Due Diligence and Transparency in relation to Minerals and Metals from Conflict- Affected Areas and Child Labour (DDTRo),10 every year we review and document our eligibility for the exemption from enhanced due-diligence and disclosure requirements in connection with child labor.

In addition, we require every supplier we work with - for example, in IT, construction, and training - to commit, in a signed statement, to fully comply with their obligations relative to social security contributions, accident insurance, personal safety, and waste management.

Playing an active role in our community

Our local community is important to us, and we take our responsibilities as a corporate citizen in Vaud Canton seriously. We pursue an active sponsorship and philanthropy policy, and we encourage employees to get involved in community projects.

Our sponsorships and donations help fund associations and events across the Canton in areas such as the arts, sports, the economy, community-building, and the environment. We partner with some of the biggest events here, and we support various innovative training and skills-development initiatives.

We lend our support to a range of projects in the area of biodiversity and to initiatives designed to make the local economy more sustainable.

The BCV Foundation, a separate legal entity from the Bank, was created in 1995 to support ambitious initiatives launched by local residents or entities. The Foundation makes donations to charity programs, cultural projects, and academic research programs.

10 Ordinance on Due Diligence and Transparency in relation to Minerals and Metals from Conflict-Affected Areas and Child Labour

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7. Sustainability topics and principles

Being a benchmark employer

BCV is one of Vaud's leading employers and the largest employer in the Canton's banking sector. Our dynamic human resources policy is crucial to both our mission and our strategy, and we encourage training to help our people grow their skill sets and to help prepare our future managers.

We are dedicated to creating workplace equality, promoting diversity, and offering the same opportunities to all staff.

We meet federal requirements on gender pay equity. We were also awarded the Fair-ON-Pay+ certification in recognition of our equal pay practices over the long term.

Quantitative objective: We aim to have 25% of senior management positions held by women by 2030.

As one of the Canton's leading employers, we know how important it is for our nearly 2,000 employees to be able to maintain their work-life balance. This is also a key factor in attracting and retaining talent. We have put in place various measures to help our employees maintain this balance, such as a parental leave entitlement that surpasses federal requirements, an annualized hours arrangement, and the option of part-time work.

We work to ensure that work relations are built around trust and mutual respect. All forms of psychological or sexual harassment are prohibited and punishable. In keeping with our duty of care to our people, we have set up an external support service for staff members who face bullying, discrimination, or violence in the workplace. We likewise offer an external counseling service for employees dealing with bereavement, financial worries, family problems, addiction, or other personal issues. These two services are independent and run by leading outside providers, and employees can approach them at any time for confidential advice and support.

We carry out employee satisfaction surveys every two years, which we commission from an independent polling firm. The firm conducts an anonymous survey of all staff members in order to obtain their opinions on working conditions, workplace relations, and satisfaction with supervisors and, more generally, to determine employee buy-in and commitment. Employee satisfaction is also tracked through annual performance reviews, where all staff members are given an opportunity to discuss their perceptions of the year just ended.

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