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SpareBank 1 SMN's

Fourth Reporting for Signatories of the Principles For Responsible Banking

April 30th 2024

Principles for Responsible Banking

Reviewed version (V2) from September 2022

Reporting and Self-Assessment Template

The following template sets out the reporting and self-assessment requirements for Signatories of the Principles for Responsible Banking (PRB). Your bank discloses which actions it has undertaken to implement the PRB by self-assessing its progress on each of the 6 Principles. This template is therefore structured in accordance with the 6 Principles that signatories have committed to.

Three Key Stepsare critical to showing that your bank is fulfilling its commitments as a signatory of the PRB, i.e. Impact Analysis, Target Setting & Implementation and Assured Reporting/Accountability. The sections in the Reporting and Self-Assessment Template that relate to the 3 Key Steps also require a self-assessment summary to demonstrate the extent to which the bank has fulfilled the respective requirements of the Key Steps.

Accommodating different starting points

Your bank has an initial four-year period from signing to implement the 6 Principles including to bring its reporting fully in line with the requirements. Your bank may not be able to provide all information required in this template in the first report. You should build on your implementation progress annually. Feedback, support, capacity building, training and peer learning are available to all signatory banks to help them progress with both implementation and reporting.

Timeline for reporting and assurance

Signatory banks need to report on their implementation of the Principles on an annual basis. The first PRB report has to be published within 18 months of signing the Principles, to give the bank some flexibility to align the PRB reporting with its reporting cycle. Publishing the first PRB report at any point earlier than 18 months after signing the Principles is therefore an option. After the first PRB reporting has been published, subsequent reports have to be published annually thereafter, i.e. within 12 months at the latest after the prior report1.

Assurance

The last report within the initial 4 year implementation period (and subsequent reports thereafter) needs to be assured, which means that at least the third PRB report needs to be assured. Banks are encouraged to put the assurance process in place well before that and have earlier PRB reports already assured.

1 Early reporting is permitted, although sufficient time to show progress from one year to the other should be taken into account.

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All items that relate to the three Key Steps(highlighted in yellow) require limited assurance by year four of signing the PRB, undertaken by an independent third party with relevant expertise in the field. These are:

• 2.1 Impact Analysis
• 2.2 Target Setting
• 2.3 Target Implementation and Monitoring
• 5.1 Governance Structure for Implementation of the Principles

An assurer provides limited assurance of your self-assessment in these listed areas. You can do this by including it in your existing assured reporting. Where third-party assurance is not feasible, an independent review may be conducted. Assurance requirements are described in more detail in the Guidance for Assurance providers: Providing limited assurance for reporting.

Purpose of the template

The purpose of this template is to assist signatories in disclosing their progress on implementing the PRB. The disclosed information is used by the UNEP FI Secretariat as the basis for the individual review of each bank's progress, as well as for reporting the collective progress made by the PRB Signatory Group. To measure collective progress in a consistent manner, some standardized questions to be completed by the banks are integrated into the template. The open questions give banks the flexibility to disclose the progress they make, considering the diverse business models and various contextual differences in which banks operate.

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How to use this template

This template gives banks the chance to provide summaries of the annual progress made in implementing each Principle. It is designed for your bank to provide references/links to where in your existing reporting/public domains (websites) the required information can be found to support your answers. The aim is to keep any additional reporting burden to a minimum while ensuring transparency and accountability as set out in Principle 6. When referring to other documents, please specify the pages where the exact information appears.

The Reporting and Self-Assessment Template shall not be amended structurally and content- wise. The content and text of the template can be applied to corporate layout and designed accordingly, without omitting parts of the texts. The Reporting and Self-Assessment Template can be integrated into your bank's reports (annual report, sustainability report or relevant reporting formats) or can be published as a stand-alone document. It needs to be publicly available and will be listed on the UNEP FI Signatories page.

The reporting needs to be published in English. Information that is referenced to within the Reporting and Self-Assessment Template should also be available in English. Where that is not possible, it is recommended to include the summary of relevant information as text in the Template, so that all necessary information can be taken into account when the UNEP FI Secretariat reviews the bank's performance.

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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 SMN is an independent regional savings bank and the region's leading financial services group. Together with our subsidiaries and affiliates, we are a complete financial centre catering to both the retail and the corporate market. With subsidiaries, and the merger with SpareBank 1 Søre Sunnmøre included, we have about 1,740 employees at the end of 2023.

SpareBank 1 SMN is one of six owners of SpareBank 1-alliansen. Through this alliance we offer competitive products in the fields of financing, savings and investment, insurance and payment services along with estate agency, leasing, accounting services and capital market services.

SpareBank 1 SMN is organised under the following structure:

Links and references

Annual report 2023 - This is SpareBank 1 SMN (page 8-10).

Annual report 2023 - SpareBank 1 SMN's organisational set-up (page 11-13).

Note 8 - Loans and advances to customers (page 145- 149).

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Distribution of the banks exposure (NOK bn) in terms of segments:

The total excludes gross loans sold to SpareBank 1 Boligkreditt (64,7

NOK bn) and gross loans sold to SpareBank 1 Næringskreditt (1,7

NOK bn).

Gross loans sold to SpareBank 1 Boligkreditt should, for all practical purposes, be included in exposures to Wage Earners (Mortgages to retail customers).

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Distribution of the banks exposure (NOK bn) in terms of geographical area:

The total excludes gross loans sold to SpareBank 1 Boligkreditt (64,7 NOK bn) and gross loans sold to SpareBank 1 Næringskreditt (1,7 NOK bn). Gross loans sold to SpareBank 1 Boligkreditt are exposures to private households in Trondelag and More og Romsdal.

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

Response

The Group's strategies aim to ensure integration of sustainability throughout the Group's different business units (retail and corporate lending, investments, accounting, brokerage). The measures implemented through the Group's sustainability and climate strategies relate to financing, procurement, advisory, customer

Links and references

Annual report 2023- Our sustainability effort/Introduction (Page 41-43)

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offerings and competence enhancement. Key performance indicators	Annual report 2023 -
relating to the Group's different measures has been developed and	Reducing the carbon
are continously being monitored and is subject to periodic reporting	footprint in loan
to the board and executive team management. The Group's	portfolios (Page 62-
overarching climate-target is to achieve net zero greenhouse gas	63)
emissions from financing and day-to-day operations by the end of the
2050.	Annual report 2023 -
	Carbon footprint in
The Group's strategies is designed to make sure that the Group's	day-to-day
operations (Page 92-
business models are able to withstand the transition that society and
93)
business are going through. The Group's strategies focuses on
achieving the Group's growth ambitions and financial goals while	Sustainability Strategy
being compliant with applicable national and international laws and
regulations, as well as policies related to climate and climate	SpareBank 1 SMN
transition.
Pillar 3 disclosures
	(Capital adequacy |
In August 2023, the board decided that validated goals in line with	SpareBank 1 SMN)
the Science Based Targets initiative (SBTi) should be developed for
all significant sectors in the Group's loan portfolio. A public
commitment to reduce GHG-emissions in line with a 1.5-degree
trajectory (The Paris Agreement) was submitted to SBTi on October
6, 2023. This commitment entails that over the next two years,
SpareBank 1 SMN will develop and seek approval for both short-
term and long-term targets, along with associated action plans,
leading up to 2050.
In 2023, we also set up an internal project group with resources from
several business lines to develop a framework for circular transition
in the group. Two stages are involved: the first focusing on the
group's day-to-day operations, the second focusing on the loan
portfolios.

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 regularly2 and fulfil the following requirements/elements (a-d)3:

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.

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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

The impact analysis was prepared by the Group's ESG- committee in collaboration with external consultants from EY Norway. The Group's core business areas (retail and corporate lending, brokerage and accounting services), across the geographic areas in which the Group operates, was included in the analysis. No business areas nor geographical locations was excluded.

The impact analysis was conducted in the latter part of 2022, and to make sure that our focal areas are in line with the expectations, preferences and perspectives of our stakeholders, we are currently updating our impact analysis as a part of our double materiality analysis. The process of updating the double materiality analysis is expedited to meet new sustainability regulations (CSRD), and is expected to be finalized in May 2024.

Links and references

Annual report 2023 - Our focal areas (Page 43-44).

Annual report 2023 - Up-coming statutory requirements and regulation (Page 45- 47).

Group impact analysis

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
2. 1. by sectors & industries4 for business, corporate and investment banking portfolios (i.e. sector exposure or industry breakdown in %), and/or
   2. 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

The portfolio analysis was performed with a basis in UNEP FI Impact Analysis Tool v3. The tool is populated with the bank's and SpareBank 1 Finans' business data, which in combination with pre- completed data provides an estimate of the group's largest potential negative and positive impact areas.

Sector analyses were done with a basis in the SASB's Materiality Finder5 and the MSCI's Materiality Map.

The bank's exposure to financed greenhouse gas emissions and ESG risks was obtained from the group's PCAF and ICAAP reports

Links and references

Group impact analysis

1. 'Key sectors' relative to different impact areas, i.e. those sectors whose positive and negative impacts are particularly strong, are particularly relevant here.
2. Find Industry Topics - SASB

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The analysis for Regnskapshuset was done by identifying which sectors account for Regnskapshuset's largest revenues.

The analysis for EiendomsMegler 1 Midt-Norge is based on the distribution of energy ratings for dwellings sold since the start of 2021.

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