SpareBank 1 Østlandet : Climate Report 2022

Climate Report

2022

CONTENT

PAGE

Selected key figures
and introduction	Selected key figures	4
Page 4	Introduction	5

Strategic anchoring,	Strategic anchoring	6
frameworks and
Initiatives and frameworks	8
commitments

Page 6

Emissions own operations

Page 10

Emissions own operations	10
Goals and goal attainment for 2022	11
Science based plan for reductions	12

Emissions from our value chain - the loan portfolio

Page 14

Mortgage portfolio	14
Emissions	14
Science based targets - RD	15
Products and activities with environmental benefits - RD	16
Corporate market portfolio	16
Emissions	17
Science based targets - CD	19
Emissions from our sectors	20
Products and activities with environmental benefits - CD	27

The road ahead

Page 27	The road ahead	27

Selected key figures

Green loan ratios

Introduction

The bank has the following 2050 goal: We have been part of creating a sustainable zero-emission society within the planet's tolerance limits.

A very important part of this work is to limit the harmful climate changes through net zero emissions of greenhouse gases in 2050. The bank has therefore signed the Net Zero Banking Alliance (NZBA) and works for net zero emissions by 2050 both from its own operations and from our value chain. In this report, we explain how we work with the net zero ambition.

17,2 %	18,1 %	12,5 %
green loan of total	Green share of	Green share of
lending.	mortgages.	corporate lending.

Total greenhouse gas emissions	are shown below.
	The bank's total greenhouse gas emissions calculated in tCO2e

Housing mortgage

portfolio retail

Lending portfolio

Own operations

market

corporate market

Total emissions

To succeed in our ambition, we must deploy our resources where we have the most emissions. For the bank, this applies in the value chain, linked to our lending. We are therefore working to reduce greenhouse gas emissions in both the private market and business market portfolios. This means that we are constantly increasing the proportion of the portfolio that is considered to have lower greenhouse gas emissions and can therefore be considered "greener".

The bank reports on both direct (scope 1) and indirect emissions (scope 2 and 3) for its own operations. Within indirect emissions (scope 3), we also report estimated greenhouse gas emissions from the bank's value chain, through lending to our customers. In our annual report, we also report on greenhouse gas emissions linked to the ODIN funds we offer to customers. The bank has indirect ownership in ODIN management through SpareBank 1 Forvaltning. Since the bank is part of the Collective Commitment on Climate Action (CCCA), we use the four guidelines set out in UNEP FI's "Guidelines for Climate Target Setting for Banks":

1.	Set and report on long-term goals to reach the
	Paris Agreement.
2.	Set a baseline for emissions in the portfolio with
	annual measurements.
3.	Use science-based scenarios for decarbonisa-
	tion that are aligned with the Paris Agreement.

Methods for calculating emissions

The bank is a member of and uses the Partnership for Carbon Accounting Financials (PCAF) method to calculate emissions for the corporate market port- folio, and this has also been used for the housing mortgage portfolio from 2022. We have actively participated in Finance Norway's work on harmonising reporting on greenhouse gas emissions from loan portfolios, for example by using the PCAF method.

Method for setting science based targets concerning zero emissions

We have used the method developed by the Science Based Targets initiative (SBTi) to set science based targets for reducing greenhouse gas emissions to zero by 2050. The Bank was assisted by the company, Cemasys. The calculations are not submitted to SBTi for approval because in addition to housing mortgages we almost only have small and medium-sized enterprises in the loan portfolio. SBTi does not have a method suited to such a portfolio. However, we have signed up to SBTi and will submit the targets for approval as soon as SBTi has a method we can use.

Method for calculating share of green loans

In 2021, the Bank developed a green bond framework in which parts of the loan portfolio is defined as light, medium or dark green based on various criteria.

The framework is subject to third-party verification by Cicero Shades of Green, which rated the general

Direct emissions (scope 1)

Indirect emissions from purchased energy

(scope 2)

Indirect emissions

from supply chain (scope 3)

8t CO2

516

t CO2

179

t CO2

-

-

18 673

t CO2

-

-

248 660

t CO2

8tCO2

516

tCO2

267 512

t CO2

4. Regularly update the targets to keep pace with

the latest climate research.

framework 'medium green'. Our criteria have also been assessed in relation to the EU Taxonomy as it was proposed at the time. Essentially, the definition used in our bond framework is the definition used to define what is 'green'. If the reporting deviates from this, this is stated.

Total	703	18 673	248 660	268 036
	t CO2	t CO2	t CO2	t CO2

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5

Strategic anchoring, framework and commitments

The definition of "green" is given by our bond framework, with the exception of new housing, where we use a provisional definition pending an update of our framework after NZEB is defined in Norway. The goal must be achieved in the following way:

Strategic anchoring

TOTAL GREEN ASSETS

Through a number of global initiatives and frame- works, SpareBank 1 Østlandet has committed itself to taking its share of the responsibility for addressing the climate crisis we are facing. From 2022, sustainability is reinforced in the bank's main strategy, as one of our four main goals towards 2025. The goal is:

• We are a clear driving force for sustainable transition.

We have carried out an Impact analysis (UNEP FI Impact analysis). This shows that we have a negative and positive impact on the climate within both lending to both the retaill market (PM) and the Corporate market (BM). Therefore, work with climate is a central part of the bank's sustainability work. In the bank's strategy, which runs from 2022 to 2025, various strategic initiatives are defined, where "Zero emissions 2050" is an overall strategic initiative to achieve the bank's goals. Within this strategic initia-

Total green assets - own balance

Total green assets incl. assets transferred to covered bond companies

Total Green Assets - KPI path

Actual Green Ratio

2Q 2022	3Q 2022	4Q 2022
19,1%	19,9%	21,5%
16,2%	16,4%	17,2%
16,5%	16,5%	16,9%

Target Green Ratio

2022

2023

2024

2025

16,9% 17,5% 18,8% 21,3%

This means, among other things, that we channel capital to sustainable projects, and to the necessary transition to a sustainable and climate-neutral society. We ensure that sustainability is an integral part of the bank's operations and that we actively contribute to achieving the UN's sustainability goals, both in customer oriented work, through our internal operations, and that we include the work in our supply chains.

tive, we will work towards net zero emissions by reducing CO2 emissions from our operations and in our lending and investment portfolios.

RESIDENTIAL MORTGAGES

Residential mortgages - own balance

Residential mortgages - tranferred SB1 Boligkreditt

Residential mortgages - KPI path

2Q 2022

3Q 2022

4Q 2022

15,3% 16,3% 17,1%

19,8% 19,4% 19,8%

17,0% 17,3% 17,5%

2022

2023

2024

2025

17,5 18,0% 19,0% 20,0%

CORPORATE MARKET (CM)

Impact analysis of the Bank's largest business areas: Retail Division (RD) and Corporate Division (CD)

	Areas that are positively affected	+		÷ Areas that are negatively affected
S	Food	1	Corporate	1	Resources efficiency/security	E
			Division
S	Housing	2		2	Climate	E
E	Climate	3		3	Waste	E
S	Housing	1	Retail Division	1	Resources efficiency/security	E
S G	Inclusive, healthy economies	2		2	Climate	E
S	Work	3		3	Inclusive, healthy economies	S G

Corporate Real Estate

Agriculture

Forestry

Renewable Energy

Total Green Assets CM - own balance

Total Green Assets CM incl. Assets transferred to

SB1 Næringskreditt

Corporate Market - KPI path

2Q 2022	3Q 2022	4Q 2022
23,2%	23,0%	28,9%
0,2%	0,3%	0,4%
100,0%	100,0%	100,0%
100,0%	100,0%	100,0%
11,9%	11,6%	12,9%
11,6%	11,3%	12,5%
13,1%	13,5%	13,9%

2022	2023	2024	2025
29,4%	32,9%	36,5%	40,0%
0,4%	0,6%	0,8%	1,0%
100,0%	100,0%	100,0%	100,0%
100,0%	100,0%	100,0%	100,0%

13,9% 15,4% 16,7% 18,0%

E Environment, climate and nature

S Social conditions and Human rights

G Governance

To achieve our overall goal of being a clear	› From 2021 to 2025, the green share of the
driving force for sustainable transition, the bank	total lending portfolio must be increased
has adopted an overarching KPI at group level:	from 16.3% to 21.3%..

SpareBank 1 Finans Østlandet

	2Q 2022	3Q 2022	4Q 2022	2022	2023	2024	2025
Clean Transportation	11,8%	12,1%	12,5%
KPI path	11,8%	12,2%	13,6%		17,4%	21,2%	25,0%

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UN Sustainable Development Goal 13, the Paris Agreement and the planetary boundaries.

We use a number of frameworks and commitments to support our climate work. From the UN's Sustainable Development Goals (SDG), we have selected eight goals that we consider essential for our bank, and one of them is SDG 13 - stopping climate change. Together with the Paris Agreement, it forms the basis for climate work. The bank has also decided to have a research-based starting point for sustainability work in the current strategy period. Concretely, this means that research into the planetary boundaries is the basis1. As the figure shows, climate is one of the planetary boundaries which is "In zone of uncertainty - increasing risk". Therefore, we do not only work with climate, but we also look at connections with the other planetary boundaries. For more information, see the report SpareBank 1 Østlandet's impact on nature, which is available on our website.

To succeed in the fight against the climate challen- ges, we must collaborate with other players in the financial industry, both nationally and internationally. Below follows a description of which initiatives we have joined in this work, and how we use these to achieve our objectives.

The nine planetary boundaries - from Stockholm Resilience Centre

Net Zero Banking Alliance - NZBA

The United Nations Environment Programme's (UNEP FI) net zero initiative for banks was launched in April 2021 in the run-up to the climate summit

in Glasgow that same year. The bank joined the initiative at the start and, one year after it started, is still one of only two Norwegian banks to have joined the climate initiative3. A central part of the work is to prepare methods and guides for working with zero emissions, and the bank actively participates in several working groups. The NZBA has a "Commitment statement" which, among other things, obliges us to:

• Adjust emissions from own operations, lending

and investments to a net zero emissions path by

2050.

• Within 18 months, set a 2030 target and a 2050

target, with intermediate targets to be set eve-

ry 5 years from 2030 onwards.

• The 2030 target must focus on priority sectors

where the bank can have the greatest influence,

i.e. the most greenhouse gas-intensive sectors.

• Annually publish absolute emission and emission

intensity figures in line with best practice and

within one year of setting targets, show pro-

Partnership for Carbon Accounting Financials -

PCAF

PCAF is a global partnership between financial institutions that work to gain access to data, and report on greenhouse gas emissions. The bank joined in 2020 and actively uses the method to estimate emissions from the lending portfolio. The figures appearing in this report on emissions from the lending portfolio have been arrived at using PCAF.

Science Based Target

The bank has implemented a science-based target to reduce greenhouse gas emissions for both scope 1, 2 and 3 (including the lending portfolio). This is shown through the report.

CDP

In recent years, the bank has reported on its climate work via the internationally recognized non-profit climate organization CDP. We achieved the grade A in 2020, A- in 2021 and A in 20225

Task Force on Climate-related Financial Disclosures - TCFD

TCFD is used in the assessment of climate risk, and the bank has reported annually according to TCFD since 2018 through our annual reports6.

1  https://www.jus.uio.no/forskning/omrader/selskaper/aktuelle-saker/fns-berekraftsmal-april-2018.html

gress according to given criteria

EU taxonomy

Initiatives and framework

Collective Commitment to Climate Action - CCCA This initiative was launched by the United Nations Environment Program (UNEP FI) in September 20191. The bank signed these climate commitments for banks the same autumn, which means that we are taking clear steps towards adapting our operations to the international climate goals. These are the obligations:

5. No later than three years after signing this

commitment, set and publish sector-specific,

scenario-based targets for portfolio prioritiza-

tion.

6. Take action now, while working with methods

and developing goals. We commit, within 12

months of signing, to start publishing and imple-

menting measures we will take in the bank and

together with our clients to support and accele-

rate the shift towards low-carbon,climate-adap-

• Take a robust approach to compensating emis-

sions 4.

See the bank's reporting to the NZBA on our websi- tes.

Eco-Lighthouse

Since 2008, the bank has used this environmental management system (EMS) to become environmentally certified. We also use it to report on our own direct (scope 1) and indirect (scope 2 and 3) greenhouse gas emissions. The figures that appear in this report on own emissions are taken from the Environmental Lighthouse report

The EU's classification system for sustainable activities will become part of Norwegian law during 2022. The bank works to classify the portfolio according to the EU's classification system and according to the Act on the publication of sustainability information and publish taxonomy-related information in the annual report for 2021.

European Climate Pact

In 2021, the bank joined The European Climate Pact, which obliges us to take concrete measures for climate and the environment. The Climate Pact is part of the EU's Green Deal7.

1. Focus our efforts where we have or can have the greatest effect, i.e. first focus on the most carbon-intensive and climate-vulnerable sectors in our lending portfolios.
2. Have dialogue and cooperation with our custo- mers about the necessary changes.
3. Work together and support each other to develop banks' ability and methods to measure climate impact and adaptation to global and local climate targets.
4. Interact with authorities, scenario providers and other relevant actors on the development of clear and feasible sector-specific roadmaps to reach well below 2 and strive for 1.5 degrees of warming, for all relevant sectors and across different geographical areas.

ted technology, business models and society.

In September 2020, the bank submitted a report on the status of our work within the commitment, and we contributed in 2021 to a joint report from CCCA. See more information on our websites2. However, some of the work in CCCA has been moved to the initiative below.

3  https://kommunikasjon.ntb.no/pressemelding/sparebank-1-ostlandet-oppfordrer-norske-banker-til-a-signere-mal-om-nullut-slipp-innen-2050?publisherId=17847612&releaseId=17908948

4  https://www.unepfi.org/banking/bankingprinciples/commitments/ccca/ 5  https://www.cdp.net/en/companies/companies-scores

6  https://www.sparebank1.no/nb/ostlandet/om-oss/investor/rapporter.html

7  https://www.sparebank1.no/nb/ostlandet/om-oss/samfunnsansvar/tilslutning-globale-initiativer.html

1  https://www.unepfi.org/banking/bankingprinciples/commitments/ccca/

2  https://www.sparebank1.no/nb/ostlandet/om-oss/samfunnsansvar/tilslutning-globale-initiativer.html

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