Taxonomy disclosures of PZU Group

Technology increases business efficiency and customer satisfaction. PZU develops new ways of determining the extent of damage to speed up the determination of the amount of compensation. For property insurance, in addition to inspection by the Mobile Expert at the location indicated by the customer or in the repair workshop within the network, the amount of damages may be determined within:

• simplified service (no inspections),
• self-service (self-calculation of the amount of damages).

In accordance with the requirements of the EU Taxonomy, the principle of “Do No Significant Harm” is taken into account in the calculation of premiums. Client activities related to “the mining, storage, transport or production of fossil fuels” and insurance for “vehicles, property or other assets intended for such purposes” have been identified based on the Polish Classification of Activities (PKD) and in few cases at the contract level. Insurance from such activities are excluded from the Taxonomy indicators calculations.

Taxonomy indicators for insurance are calculated in PZU only from products that meet all the requirements of the EU Taxonomy, taking into account the exemptions related to the “do no significant harm” criteria. In line with the initial interpretation by the European Commission, of the implementation of Article 8 of the EU Taxonomy in the context of disclosures required by the “Disclosure Delegated Act”, dated 21 December 2023, only the part of the premiums that cover climate risk were included in the calculation. This part was estimated for each taxonomy product based on the share of losses that result from climate risks in all claims over the last 10 years or less for newly introduced products. The remaining portion of revenues were shown in revenues not eligible for systematic treatment, as per Commission Notice C/2024/6691 dated 8 November 2024*.

* 5 Commission Notification C/2024/6691 dated 8 November 2024 on the interpretation and enforcement of certain provisions of the delegated act specifying the disclosure obligations pursuant to Article 8 of the EU Sustainable Systematics Regulation concerning the reporting of business activities and assets eligible for systematic and compliant systems (third notice of the Commission), section 67.

Taxonomy analysis of the reinsurance business was limited to intragroup activities. PZU does not have the appropriate data for the non-group activities.

In the PZU Group, in the area of potential taxonomycompliant activity, mainly fire and other damage to property insurance is reinsured. In addition, close cooperation between the insurer and reinsurer in climate risk modeling ensures that the requirements for risk and product modeling are met. In the intragroup activity, it was assumed that reinsurance of premiums from products that meet all requirements of the EU Taxonomy is also the basis for meeting the EU Taxonomy product criteria for reinsurance. The declaration on data sharing posted on the PZU website also includes data from the reinsurance business. PZU also confirms that the handling of the reinsurance losses is carried out in accordance with the requirements of the EU Taxonomy, in particular this means high standards of conduct and timely handling of claims and benefits. The support of the reinsurer is confirmed by a clause of cooperation in the handling of claims and parallel payment, which provide support to the insurer in the assessment of claims as well as in the immediate financing of compensation payment.

In order to fully capture the image of the PZU Group in accordance with the EU Taxonomy, the indicators were calculated in two views: unit for PZU and consolidated for the entire PZU Group, i.e. for all PZU Group subsidiaries that conduct business in the area of property and casualty (non-life) insurance: PZU, LINK4, TUW PZUW, TUW Polski Gaz in claims handling, Lietuvos Draudimas, Lietuvos Draudimas – Estonian branch, BALTA and PZU Ukraine. The 2024 disclosure calculations were made using the income in accordance with IFRS 17. The calculations take into account the principles of consolidation, in particular the exclusion between the Group entities.

Taxonomy disclosures for 2023 were converted to align the methodology of financial data presentation standards. 2023 data recalculation was performed to ensure data comparability with 2024 data. Both 2023 and 2024 data are prepared according to taxonomy requirements, based on the amount of insurance revenues and have been adjusted to the applicable law, including changes resulting from IFRS 17. In addition, 2023 data has been re-calculated as the revision of the previous year’s product classification indicated the need to correct the assigned revenues and transfer them between a systematic and non-systematic group, as per Commission Notice C/2024/6691 dated 8 November 2024.

The following factors contribute to the change in revenue in 2024 compared to 2023:

• Higher revenues from taxonomy-compliant products – increased interest in products allowing customers to implement protection against factors categorized as climate risk is observed. The factor had positive impact.
• Akt Update of indicators that are multipliers of climate risk coverage in the design of products classified as taxonomy compliant. As taxonomycompliant revenues, PZU Group reports only the part of revenues that directly relates to climate risk in the product. Multipliers are calculated using actuarial formulas, as the average of the last 10 years, unless the product has no such history. For new products, the maximum period of availability in the PZU offer is used. Climate risk coverage rates in products assessed to be taxonomy-compliant are subject to annual cycle updates. The factor had positive impact.

The predominant cause of the increase in percentage indicating revenues consistent with the EU Taxonomy is the first of the above factors.

In 2024, PZU updated its “Guidelines on the interpretation of the EU Taxonomy for insurance, reinsurance, investment activities and the fulfillment of minimum safeguards rules”.

According to Article 7(3) of the Delegated Disclosure Act, exposures to companies that are not subject to the obligation to publish non-financial information under Articles 19a or 29a of Directive 2013/34/EU are excluded from the numerator of key performance indicators (KPIs). As a result, green bonds issued by Small and Medium-sized Enterprises (SMEs), financing of renewable energy projects (e.g., wind farms), as well as loans granted to such entities, have been excluded from the KPI numerator.

In the denominator (in assets covered by the KPI), derivative instruments included in the assets of the Financial Statement were taken into account, without offsetting them against liabilities from derivative instruments (liabilities).

Przyjęto, że w art. 7 ust. 4 Aktu Delegowanego dotyczącego Ujawnień jest mowa wyłącznie o obligacjach ekologicznych oraz ekologicznych dłużnych papierach wartościowych, to nie należy zasad opisanych w tym przepisie interpretować rozszerzająco jako obejmującego inne formy inwestycji, takich jak pożyczki udzielane na taki cel. Przyjęto, że art. 7 ust. 4 Aktu Delegowanego dotyczącego Ujawnień nie jest przepisem szczególnym wobec art. 7 ust. 3 tego Aktu.

It was assumed that since Article 7(4) of the Delegated Disclosure Act refers exclusively to green bonds and green debt securities, the provisions of this article should not be broadly interpreted to include other forms of investments, such as loans granted for this purpose. It was concluded that Article 7(4) of the Delegated Disclosure Act is not a special provision in relation to Article 7(3) of the same Act.

In the scope of Taxonomy-eligible activities (Taxonomy eligibility), instead of revenue (REVENUE) and capital expenditures (CAPEX), Green Asset Ratio (GAR) indicators were adopted in the form of GAR_REVENUE and GAR_CAPEX. For investments in insurance companies, instead of revenue (REVENUE) and capital expenditures (CAPEX), Green Investment Ratio (GIR) indicators were used in the form of GIR_REVENUE and GIR_CAPEX. In cases where a GIR indicator was not available for a given insurance company, the Green Underwriting Ratio (GUR) was adopted. It was recognized that GIR is the most appropriate indicator for insurance companies, given the large scale of their investments. However, in the unlikely absence of this indicator, the secondary KPI for the insurance company, GUR, would be considered.

Financial enterprises are defined in Article 1(8) of the Delegated Disclosure Act. Entities that provide other financial services but do not meet the criteria of this definition were classified as non-financial enterprises. The classification was based on Bloomberg data, considering detailed sub-sectors within the Financials sector.

Enterprises subject to Articles 19a and 29a of Directive 2013/34/EU, meaning those obligated to report nonfinancial sustainability information, were identified based on data from external sources. For Polish enterprises, the Instrat Foundation database was used. For enterprises from other countries, Bloomberg data was utilized, with the assumption that an enterprise is subject to non-financial reporting obligations if it employs more than 500 employees according to Bloomberg data. No additional verification was conducted in this regard.

As part of reporting the breakdown of the KPI numerator by environmental objective, transitional activities and enabling activities were reported without differentiation between climate objectives (climate change mitigation (CCM) and climate change adaptation (CCA)). The data was sourced from Bloomberg. PZU Group collaborates with ESG data providers to ensure the completeness and quality of data. PZU Group will make efforts in the coming years to, depending on data availability, report the breakdown of transitional and enabling activities by climate and environmental objectives within the KPI numerator.

The data regarding the Receivables from customers on account of loans was prepared by the banks within the PZU Group that are included in the consolidated report. The data was prepared in accordance with the principles set out in Annexes V-VI of the Delegated Disclosure Act.

For the purpose of calculating EU Taxonomy alignment in its KPIs regarding exposure to other enterprises, financial enterprises themselves are not required to comply with minimum safeguards, as financing activities in themselves do not qualify under the EU Taxonomy. Each investee company in which PZU Group invests independently determines and reports whether it meets the minimum safeguards. A company may consider its activities Taxonomy-aligned only if it meets the minimum safeguards. If a company reports that a certain percentage of its activities is aligned with the EU Taxonomy, this means that it meets the minimum safeguards. PZU Group does not conduct any additional verification.

According to Annex IX of the Delegated Disclosure Act, additional disclosures distinguish the percentage share of investments related to life insurance contracts where the investment risk is borne by policyholders and the percentage share of other investments. Investments related to life insurance contracts where the investment risk is borne by policyholders include, among others, life insurance with an unit-linked insurance fund (Polish: UFK).

As indicated above, the look-through approach was applied, taking into account all investments held within investment fund portfolios, where participation units or shares are included in UFK portfolios.

As indicated above, real estate properties were analyzed for EU Taxonomy compliance based on their inclusion in the following balance sheet asset categories:

• tangible fixed assets;
• assets held for sale.

It was assumed that for assessing the compliance of real estate with the EU Taxonomy, real estate-specific indicators would be used rather than revenue (REVENUE) or capital expenditures (CAPEX), which do not apply to real estate. Real estate has its own criteria and indicators for EU Taxonomy compliance. Investments are presented using the look-through approach, meaning that the relevant investments are real estate properties (buildings) owned by individual companies within PZU Group, including special purpose entities belonging to the PZU FIZAN Real Estate Sector 2 fund.

The EU Taxonomy compliance indicator calculated for a given real estate property is shown in both the revenue (REVENUE) and capital expenditure (CAPEX) categories.

Due to the lack of established standards for EU Taxonomy analysis at present, it was decided to assess EU Taxonomy compliance only for existing buildings. Buildings under construction were classified as noncompliant with the EU Taxonomy.

For criteria referring to the construction of buildings before or after 31 December 2020, the „construction date” was defined as the date of submission of the building permit application.

Only buildings that have already obtained an occupancy permit or another decision with a similar effect were assessed, even if it applied only to a small part of the building. Similarly, warehouse parks were assessed using the same criteria. A conservative approach was adopted, assuming that if at least one building within a warehouse park does not meet the EU Taxonomy requirements, the entire warehouse park was classified as non-compliant with the EU Taxonomy.

The following guidelines and assumptions were adopted for analyzing the energy demand criterion for buildings constructed before December 31, 2020. In Poland, energy demand classes are not used in energy performance certificates. Therefore, this criterion is assessed by answering the question: „Does the building belong to the 15% most energy-efficient buildings (residential or non-residential, respectively, for buildings constructed before 31 December 2020) in the country in terms of primary energy demand (PED)?” For all types of real estate, including office, warehouse, and commercial buildings constructed before 31 December 2020, this criterion is met if:

• among the top 15% most energy-efficient buildings (criterion for objective 1 – climate change mitigation), if PED (EP) < 118.26 kWh/m2 per year;
• among the top 30% most energy-efficient buildings (criterion for objective 2 – adaptation to climate change), if PED (EP) < 155 kWh/m² per year.

If the building has multiple energy certificates, such as those related to different tenants, the building will meet the primary energy requirements only if each part of the building complies with these requirements.

The following guidelines and assumptions have been adopted for the analysis of the energy demand criterion for buildings constructed after 31 December 2020. For all types of real estate, including office, warehouse, and commercial buildings erected after 31 December 2020, this criterion is met if:

• it is at least 10% lower than the threshold (criterion for objective 1 – climate change mitigation), if PED (EP) < 108 kWh/m2 per year
• it does not exceed the threshold (criterion for objective 2 – adaptation to climate change), if PED (EP) < 120 kWh/m2 per year.

For buildings with an area greater than 5,000 m²:

• has the building undergone air tightness and thermal integrity tests conducted by a certified company? And have the results of these tests been made available to clients/tenants?
• has global warming potential coefficient been calculated?

The following guidelines and assumptions have been adopted for the criterion concerning building management systems. This issue applies only to large non-residential buildings equipped with heating, ventilation, and air conditioning systems with a useful output of over 290 kW. For these buildings, it is determined whether there is evidence of efficient operation, such as the presence of a building automation and control system or an energy performance improvement contract. It is assumed that the building meets this criterion if it has a modern BMS (Building Management System). A 'modern BMS’ has been identified as one classified as Class A according to CBRE standards.

Improvement of energy efficiency refers to any action that systematically reduces energy consumption, e.g., replacing lighting with LED, introducing motion sensors, increasing insulation in the facade. Such improvement must be carried out annually for this criterion to be considered met in a given year.

The following guidelines and assumptions have been adopted for the criterion concerning adaptation of real estate to climate change. To meet this criterion, it must be confirmed that the property is not in a flood zone. If the due diligence report concerning the property or the local development plan indicates that the property lies in a flood zone, then the criterion is not met. When analyzing whether the property is in a flood zone, flood maps available in the PZU Risk Office or available on the geoportal, as well as entries in local plans, may also be used, provided they indicate such factors.

The following guidelines and assumptions have been adopted for the criterion concerning fossil fuels. It has been analyzed whether the property was specifically built/prepared for the storage of fossil fuels or the production of energy from fossil fuels for the purpose of further sale to end-users. If so, it cannot be considered compliant with the EU Taxonomy. The storage of fuels processed from fossil fuels, e.g., diesel oil, does not preclude the property from being considered as meeting the EU Taxonomy criteria. The decisive factor is whether the given fuel is fossil and occurs in this form naturally in the environment. The storage of fossil fuels for the company’s own operations does not exclude the property’s compliance with the EU Taxonomy, provided that the warehouse/building where these fossil fuels are stored was not built exclusively for such purposes. If it was built solely for this specific purpose, it cannot be considered compliant with the EU Taxonomy. However, a facility where there may be a need to store fuels, e.g., to ensure the operation of on-site energy-generating equipment (e.g., for heating purposes or the operation of fire protection systems), is considered to meet the EU Taxonomy conditions.

The following approach has been adopted regarding minimum safeguards in assessing the compliance of real estate with the EU Taxonomy. In evaluating the EU Taxonomy criterion concerning the human rights due diligence process, information and declarations in this regard were obtained from the property manager. For the EU Taxonomy criterion concerning anti-corruption, fair competition principles, and prevention of tax law violations, this information was obtained from the property owner, which is a company within the PZU Group.

PZU, PZU Życie, and closed-end investment funds managed by TFI PZU, whose sole participants are PZU and PZU Życie (PZU FIZAN BIS 1 and PZU FIZAN BIS 2), as part of their investment activities, finance external entities that build wind farms or other RES installations by granting loans or purchasing receivables. Loans are granted at the level of special purpose vehicles („SPV”) established for a given investment.

Entities undertaking a given investment in renewable energy sources were asked whether they meet the technical screening criteria (TSC) for energy production from renewable energy sources and the minimum safeguards for this activity. The inquiry was based on a breakdown into activities aligned with the EU Taxonomy, eligible for the EU Taxonomy, and not eligible for the EU Taxonomy, in accordance with the applicable non-financial reporting standards.

For the assessment of compliance with the minimum safeguards principle, the approach outlined in the „Final Report on Minimum Safeguards” by the Platform on Sustainable Finance was adopted. According to this principle, if a shareholder holds at least 50% of the shares, for the investment to be considered compliant with the EU Taxonomy, that shareholder must adhere to the minimum safeguards principle. Conversely, if none of the shareholders holds at least 50% of the shares, the special purpose vehicle (SPV) itself should comply with the minimum safeguards principle. Most SPVs are part of capital groups that are not subject to Articles 19a and 29a of Directive 2013/34/EU, meaning they do not prepare non-financial reports, including not publishing data on the compliance of their activities with the EU Taxonomy.

Most SPVs did not provide the PZU Group with data in this regard. In the case of entities that provided data, compliance with the technical screening criteria by the SPVs and minimum safeguards was based on the entities’ declarations, and no additional verification was performed.

Above, on a voluntary basis, the estimated Green Investment Ratio (GIR) has been disclosed, calculated in such a way as if the KPI numerator included the financing of renewable energy projects (RES), taking into account those entities that provided data.

Banks (credit institutions) within the PZU Group disclose in their non-financial statements the Green Asset Ratio (GAR) calculated in accordance with Annexes V-VI to the Disclosure Delegated Act. These ratios have been published in the banks’ reports. As indicated above, according to the adopted consolidation method for the purposes of fulfilling obligations under the Disclosure Delegated Act, consolidated companies are treated as 'transparent.’ This also applies to Bank Pekao and Alior Bank. Therefore, the banks’ loans and investments have been included in the GIR indicator for PZU Group. The data for calculations was provided by the banks in accordance with Annexes IX-X of the Delegated Disclosure Act, to effectively carry out the data consolidation process into a single GIR indicator. The data related to banks, specifically the receivables from customers on account of loans, has been included in the GIR indicator at the consolidated level.

PZU and PZU Życie invest in private equity funds based abroad. Most private equity funds are not subject to Articles 19a and 29a of Directive 2013/34/EU, meaning they are not obligated to non-financial reporting, including publishing data on the compliance of their activities with the EU Taxonomy.

For private equity funds, the look-through approach was not applied. This is justified by the fact that the companies in which these funds invest are also, in most cases, not obligated to non-financial reporting. A significant portion of both funds and portfolio companies are headquartered outside the EU. Some funds voluntarily report selected ESG data; however, due to the specific nature of this asset class and PZU’s broad investment mandate, there is a high level of diversity among portfolio funds in terms of reporting practices, data quality, and ESG policy implementation. Portfolio funds differ significantly in scale of operations, and consequently, they have substantially different budgets that can be allocated to monitoring and implementing ESG policies. Nevertheless, the issue of ESG reporting and implementing best practices is becoming an increasingly important challenge for the private equity market. The scale of a fund’s operations directly impacts the pace of changes and the introduction of new ESG procedures. Currently, there are no clear guidelines that would allow for an objective assessment of which funds are better at fulfilling ESG reporting obligations. Additionally, the private equity portfolio has a relatively small exposure within PZU’s investment asset structure. PZU Group expects an improvement in data quality in the coming years.

The indicators for PZU Group in the scope of activities related to nuclear energy and natural gas are presented separately for revenue (REVENUE) and separately for capital expenditures (CAPEX). This method of data presentation results from the fact that non-financial enterprises in which PZU Group invests have also presented their data following this format.

The following approach to reporting for the year 2024 has been adopted.

To determine whether the activity of a company in which an investment has been made qualifies for the EU Taxonomy for each of the four environmental objectives, the following information was verified:

• whether the issuer is subject to Articles 19a and 29a of Directive 2013/34/EU, i.e., whether it is obliged to report non-financial information;
• whether the issuer operates within the territory of the European Economic Area;
• what the primary NACE code is, according to the Statistical Classification of Economic Activities in the EU, concerning the issuer’s activity.

In the case where the issuer is subject to Articles 19a and 29a of Directive 2013/34/EU, meaning it is obligated to report non-financial information, operates within the territory of the European Economic Area, and its primary NACE code is listed in:

• Annex I to the Environmental Delegated Act for the environmental objective of sustainable use and protection of water and marine resources;
• Annex II to the Environmental Delegated Act for the environmental objective of transition to a circular economy;
• Annex III to the Environmental Delegated Act for the environmental objective of pollution prevention and control;
• Annex IV to the Environmental Delegated Act for the environmental objective of protection and restoration of biodiversity and ecosystems;

– the company in which the investment was made was deemed to be 100% eligible for the environmental target. It is assumed that for entities with NACE codes qualifying for the EU Taxonomy, all exposure of the PZU Group is eligible for the EU Taxonomy for a given environmental target.

For issuers not subject to Articles 19a and 29a of Directive 2013/34/EU, meaning not obligated to report non-financial information, it is assumed that their operations are not eligible under the EU Taxonomy for the four environmental objectives.

For issuers operating outside the European Economic Area, it is assumed that their activities are not eligible under the EU Taxonomy for the four environmental objectives.

In cases where the NACE code concerning the issuer’s primary activity is not listed in Annexes I, II, III, and IV to the Environmental Delegated Act, it is assumed that their activities are not eligible under the EU Taxonomy for the four environmental objectives. The reported eligibility for a given environmental objective is the ratio of exposure to all companies in which investments have been made, eligible for the given environmental objective, to the managed assets covered by the KPI.

The eligibility for the EU Taxonomy of new types of activities listed in the Climate Delegated Act under Regulation 2023/2485 was calculated based on the primary NACE codes of individual entities in which investments were made, as well as their exposure to specific economic activities. It was assumed that for entities with NACE codes qualifying under the EU Taxonomy, the entire exposure of the PZU Group is eligible for the EU Taxonomy for the respective climate objective.

The European Commission’s Notice on the interpretation and implementation of certain legal provisions of the delegated act specifying disclosure obligations under Article 8 of the EU Taxonomy Regulation concerning the reporting of taxonomyeligible and taxonomy-aligned economic activities and assets (third Commission Notice) dated November 8, 2024 (reference C/2024/6691), introduced a new recommendation for reporting Key Performance Indicators (KPIs) for mixed groups and financial conglomerates. It is recommended to disclose KPIs for individual business segments.

As previously indicated, the PZU Group is considered a financial conglomerate comprising the following financial enterprise segments:

• insurance segment, which includes insurance and reinsurance undertakings; the KPI for this segment is the Green Investment Ratio (GIR), calculated in accordance with Annex IX of the Delegated Disclosure Act and presented in accordance with Table 2 of Annex X of the Delegated Disclosure Act.;
• banking segment, which includes credit institutions and leasing companies; the KPI for this segment is the Green Asset Ratio (GAR), calculated in accordance with Annex V of the Delegated Disclosure Act and presented in accordance with Table 2 of Annex VI of the Delegated Disclosure Act;
• asset management segment, which includes investment fund companies and the general pension fund company; the KPI for this segment is the Green Investment Ratio (GIR), calculated in accordance with Annex III of the Delegated Disclosure Act and presented in accordance with the table in Annex IV of the Delegated Disclosure Act.

PZU Group companies conduct investment-related activities, for regulated companies subject to the limitations provided for by law. PZU Group companies place funds in a wide catalog of asset classes and financial instruments. PZU Group does not rely on the EU Taxonomy compliance indicators when making investments. The exposure of the PZU Group to business activities aligned with the EU Taxonomy depends on the current composition of the investment portfolio and on the indicators of compliance with the EU Taxonomy of the entities in which the investment was made.

PZU Group has not accepted restrictions on financing any specific sector, including strategic sectors, or any specific entities, including SMEs. Therefore, these specific sectors and entities are also still funded by PZU Group companies.

In the concluded life insurance contract with the Unitlinked insurance fund (pl. UFK), the policyholder selects the Unit-linked insurance fund in which he/she wishes to allocate funds from the insurance premium. These decisions affect the composition of the PZU Group’s investment portfolio and the exposure of the PZU Group to business activities aligned with the EU Taxonomy.

Compared to the statement for 2023, PZU Group green investment ratios (GIR) increased, both in terms of turnover and in terms of capital expenditures. This increase was not due to investment decisions, because as indicated, PZU Group does not rely on the alignment of investments with the EU Taxonomy indicators, and in terms of life insurance contracts where the insured bears the investment risk (life insurance with the Unitlinked insurance fund), Policyholder is responsible for the choice of the Unit-linked insurance fund in which they want to allocate the funds derived from the insurance premium. The increase in green investment rates may have been due to the holdings of the investment portfolio at a particular point in time, or the fact that more of the companies in which the investments were made have operations in line with EU Taxonomy.

W The European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) were considered supranational issuers in the 2023 statement and therefore the instruments issued by them were excluded from the assets covered by the key performance indicator. In the statement for 2024, based on the position of questions and answers of the European Commission (EU Taxonomy Navigator) EIB and EBRD were considered credit institutions rather than supranational issuers and therefore the instruments issued by them were incorporated into the assets covered by the key performance indicator. This resulted in an increase in the denominator and decrease in the numerator, as EIB and EBRD do not report EU Taxonomy activities.

The aforementioned change necessitated the transformation of comparative data.

The impact of changes on the comparative data of selected items is presented in the table below.

Compared to the statement for 2023, there was an improvement in the quality of data reported by the entities in which the investments were made, including a more uniform interpretation of individual fields in reports and indicators.

With the increasing importance of sustainability and climate change and their importance to the financial industry, PZU Group has implemented the ESG “Balanced growth” strategy for 2021-2024, which sets the direction for sustainable economic growth for PZU Group with respect for social, environmental and corporate governance issues.

One of the key actions to support the ESG’s “Balanced growth” strategy objectives was to develop and adopt a sustainable investment policy. The Sustainable Investment Policy sets out the allocation of funds, risks and ESG factors considered. PZU Group has also adopted an environmental policy which sets out a framework for managing the environmental impact of the group companies’ operations in accordance with the principles of sustainable development and a human rights policy which ensures respect for human rights in business activities, in particular in relations with employees, customers, suppliers and business partners and other stakeholders. However, the “CSR Code of best practices of suppliers of the PZU Group” is a set of standards, principles and mandatory criteria for the qualifications and evaluation of potential Suppliers.

PZU life, when managing investment products within the meaning of the SFDR Regulation, directly or through specialized entities, takes into account the main adverse effects of investment decisions on sustainability factors and publishes statements relating to these effects on its website, pursuant to Article 4 section 1 letter A of the SFDR Regulation. In addition, the portion of investment funds in which funds are allocated under the Unit-linked insurance fund promotes an environmental or social aspect by meeting the criteria referred to in Article 8 of the SFDR Regulation or aims to make sustainable investments, meeting the criteria referred to in Article 9 of the SFDR Regulation.

One part of the ESG strategy for the 2021-2024 “Balanced growth” was the increase in investment commitment to support climate and energy transformation. Since the announcement of the ESG strategy in 2021, PZU Group has joined a number of large onshore wind projects, involving a total of PLN 420 million in their financing. The increase in investment in green transformation has also become one of the main pillars of the 2027 PZU Group Strategy.

Pursuant to Article 3 the EU Taxonomy requires the entity to comply with the principles of minimum safeguards, i.e. act according to international social and ethical standards, in order to qualify for sustainable business activities classification. Pursuant to Article 18 of the Regulation, the minimum safeguards are the procedures used by the company to ensure compliance with:

• OECD Guidelines for Multinational Enterprises
• United Nations Guiding Principles on Business and Human Rights, including:
  • the principles and rights set out in the eight basic conventions set out in the International Labor Organization Declaration on Fundamental Principles and Rights at Work (referred to as ILO) and
  • the International Bill of Human Rights.