SpareBank 1 Nordmøre: Principles for Responsible Banking Reporting and Self-Assessment Template 2022

SpareBank 1 Nordmøre:

Principles for Responsible Banking Reporting and Self-Assessment Template 2022

Principle 1:

Alignment

We will align our business strategy to be consistent with and contribute to individuals' needs and society's goals, as expressed in the Sustainable Development Goals, the Paris Climate Agreement and relevant national and regional frameworks.

Business model

Describe (high-level) your bank's business model, including the main customer segments served, types of products and services provided, the main sectors and types of activities across the main geographies in which your bank operates or provides products and services. Please also quantify the information by disclosing e.g. the distribution of your bank's portfolio

1. in terms of geographies, segments (i.e. by balance sheet and/or off-balance sheet) or by disclosing the number of customers and clients served.

Response

SpareBank 1 Nordmøre offers traditional banking services such as payment services, credit, savings products and insurance. Our business areas target the Personal Banking and Business Banking segments, respectively. We are located in the northwest/middle of Norway, with branches in Møre og Romsdal and Trøndelag. We have approximately 150 employees. And in total 50 000 clients.

Links and references Annual Report 2021

Strategy alignment

Does your corporate strategy identify and reflect sustainability as strategic priority/ies for your bank?

• Yes ☐ No

Please describe how your bank has aligned and/or is planning to align its strategy to be consistent with the Sustainable Development Goals (SDGs), the Paris Climate Agreement, and relevant national and regional frameworks.

Does your bank also reference any of the following frameworks or sustainability regulatory reporting requirements in its strategic priorities or policies to implement these?

• UN Guiding Principles on Business and Human Rights

• International Labour Organization fundamental conventions ☒ UN Global Compact
• UN Declaration on the Rights of Indigenous Peoples

• Any applicable regulatory reporting requirements on environmental risk assessments, e.g. on climate risk - please specify which ones: TCFD

• Any applicable regulatory reporting requirements on social risk assessments, e.g. on modern slavery - please specify which ones: -------------------------
• None of the above

Response

Our first sustainability strategy was approved by the Board of Directors in 2020. Our updated sustainability strategy was approved in December 2022, and is based on UN SDGs, PRB, UN Global Compact.

Our updated strategy is not yet available on our website, but will be available before end of first quarter 2023.

Previous sustainability strategy website:

Principle 2:

Impact and Target Setting

We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services. To this end, we will set and publish targets where we can have the most significant impacts.

2.1 Impact Analysis (Key Step 1)

Show that your bank has performed an impact analysis of its portfolio/s to identify its most significant impact areas and determine priority areas for target-setting. The impact analysis shall be updated regularly1 and fulfil the following requirements/elements (a-d)2:

1. Scope:What is the scope of your bank's impact analysis? Please describe which parts of the bank's core business areas, products/services across the main geographies that the bank operates in (as described under 1.1) have been considered in the impact analysis. Please also describe which areas have not yet been included, and why.

Response

SpareBank 1 Nordmøre has done an impact analysis for 2020. The analysis shows areas where the bank has the greatest opportunity for positive and negative impact. The bank operates only in Norway. The analysis covered the lending portfolio and covered both Personal Banking, including Private Banking (approx. 70%), and Business Banking (approx. 30%). For Personal Banking (consumer banking) and Business Banking (corporate banking) the analysis covered our lending portfolio.

Links and references

1. Portfolio composition:Has your bank considered the composition of its portfolio (in %) in the analysis? Please provide proportional composition of your portfolio globally and per geographical scope
   i) by sectors & industries3 for business, corporate and investment banking portfolios (i.e. sector exposure or industry breakdown in %), and/or

1. That means that where the initial impact analysis has been carried out in a previous period, the information should be updated accordingly, the scope expanded as well as the quality of the impact analysis improved over time.
2. Further guidance can be found in theInteractive Guidance on impact analysis and target setting.
3. 'Key sectors' relative to different impact areas, i.e. those sectors whose positive and negative impacts are particularly strong, are particularly relevant here.

1. by products & services and by types of customers for consumer and retail banking portfolios.

If your bank has taken another approach to determine the bank's scale of exposure, please elaborate, to show how you have considered where the bank's core business/major activities lie in terms of industries or sectors.

Response

All of our lending is in Norway, and in the northwest/middle of Norway.

In our annual report the composition of our portfolio is divided by sectors and industries.

Links and references Annual Report

1. Context:What are the main challenges and priorities related to sustainable development in the main countries/regions in which your bank and/or your clients operate?4 Please describe how these have been considered, including what stakeholders you have engaged to help inform this element of the impact analysis.
   This step aims to put your bank's portfolio impacts into the context of society's needs.

Response

We have been working together with the rest of the SpareBank 1- banks to address witch challenges and prioriteries to include in our impact analysis.

Links and references

Based on these first 3 elements of an impact analysis, what positive and negative impact areas has your bank identified? Which (at least two) significant impact areas did you prioritize to pursue your target setting strategy (see 2.2)5? Please disclose.

Response

Our impact analysis shows that the following areas are the most significant:

Consumer banking:

Positive:

1. Employment
2. Inclusive, healthy economies
3. Housing

Negative:

1. Inclusive, healthy economies
2. Resources efficiency/security
3. Climate

Business Banking:

Positive:

1. Inclusive, healthy economies
2. Employment
3. Health & sanitation Negative:

1. Climate
2. Resources efficiency/security

Links and references

1. Global priorities might alternatively be considered for banks with highly diversified and international portfolios.
2. To prioritize the areas of most significant impact, a qualitative overlay to the quantitative analysis as described in a), b) and c)

will be important, e.g. through stakeholder engagement and further geographic contextualisation.

3. Waste

For our target setting we have chosen to include climate and housing and inclusive, healthy economies. This is also as a result of our materiality analysis.

1. For these (min. two prioritized impact areas): Performance measurement:Has your bank identified which sectors & industries as well as types of customers financed or invested in are causing the strongest actual positive or negative impacts? Please describe how you assessed the performance of these, using appropriate indicators related to significant impact areas that apply to your bank's context.
   In determining priority areas for target-setting among its areas of most significant impact, you should consider the bank's current performance levels, i.e. qualitative and/or quantitative indicators and/or proxies of the social, economic and environmental impacts resulting from the bank's activities and provision of products and services. If you have identified climate and/or financial health&inclusion as your most significant impact areas, please also refer to the applicable indicators in the Annex.
   If your bank has taken another approach to assess the intensity of impact resulting from the bank's activities and provision of products and services, please describe this.

The outcome of this step will then also provide the baseline (incl. indicators) you can use for setting targets in two areas of most significant impact.

Response

Links and references

For our Business Banking area we have conducted a climate stress test to determent which of our industries are experiencing most climate risk. Both physical climate risk and transition risk. This will be included in our ICAAP process.

Self-assessment summary:

Which of the following components of impact analysis has your bank completed, in order to identify the areas in which your bank has its most significant (potential) positive and negative impacts?6

Scope:	☒ Yes	☐ In progress	☐ No
Portfolio composition:	☒ Yes	☐ In progress	☐ No
Context:	☒ Yes	☐ In progress	☐ No
Performance measurement:	☒ Yes	☐ In progress	☐ No

Which most significant impact areas have you identified for your bank, as a result of the impact analysis?

See assessment above

How recent is the data used for and disclosed in the impact analysis?

• Up to 6 months prior to publication
• Up to 12 months prior to publication ☒ Up to 18 months prior to publication
• Longer than 18 months prior to publication

6 You can respond "Yes" to a question if you have completed one of the described steps, e.g. the initial impact analysis has been carried out, a pilot has been conducted.