What role does ESG currently play in the decision-making process at OTP Bank Romania?

Environmental, social, and solid governance concerns play an increasingly important role in our lives. At OTP Bank Romania, last year we defined our local ESG Strategy, clarifying our main objectives and directions in each area of the bank's activity. To ensure comprehensive implementation, we have included strategic ESG items into our Business Strategy and responsibilities across divisions and this approach ensures that ESG principles and key objectives are integrated in decision-making processes all over the organization.

Prior to that, we initiated the integration of ESG factors into our Credit Risk, Operational & Market Risk Policies and we are actively working on further developing this integration in alignment with the OTP Group framework and evolving regulations. As one simple example of ESG impact in decision-making at this level: in credit underwriting, we take into account the ESG rating of corporate clients and even exclude from financing certain controversial activities from environmental or social perspectives.

Which sustainable projects did you finance in 2022? What are your plans for this year?

We have a promising portfolio of financed sustainable projects, mainly on green building and renewable energy.

Together with OTP Hungary, we have participated in a few syndicated loans that supported several sustainable real estate developments in Romania. The total exposure for these projects amounted to €115 million by the end of 2022.

For wind and solar energy production projects, we provided financing of over €55 million, targeting a new generation capacity of over 1,250 MW from renewable sources.

We are currently working on implementing financing contracts for several new important sustainable projects in the same categories, namely renewable energy production and green real estate investments.

Furthermore, this year we have taken steps to enhance our commitment to sustainable financing. Thus, we have developed a local methodology under the OTP Group Green Loan Framework that will enable us to assess the alignment of our new sustainable projects with the EU taxonomy and the Climate Bond Initiative (CBI) definition. The expanded methodology will cover a wider range of sectors and incorporate a greater variety of potential sustainable activities.

OTP Bank Romania has been involved in several CSR projects regarding the protection of the environment. Will you be involved in similar projects this year?

We firmly believe that by actively participating in efforts to protect and preserve the environment and raise general awareness of such initiatives we can contribute to a sustainable future. Corporate responsible actions are an integral part of running our bank because what we do has a lasting impact, so we have made sure that we can play a positive role in the lives and education of our employees, customers, and the wider community by promoting responsible behaviours. As part of these efforts, we have actively participated in various initiatives aimed at making a positive impact on the environment and raising public awareness of such needs.

One such project in 2022 was our collaboration with "Asociația Ape fără plastic" for the "Jiul fără plastic" river cleaning action, where 22 OTP volunteers joined forces to clean up the Ișalnița barrage area, successfully recovering 400kg of plastic waste. The action was re-edited in 2023, with our volunteer team collecting more than 300 kg of plastic waste from the riverbank. Such endeavours were very important in raising awareness about the importance of preserving our waterways and reducing plastic pollution.

Another example is the Edu Plant action, organized in collaboration with the Aura Ion Association, with 30 volunteers from OTP Bank Romania and the OTP Bank Romania Foundation working together to transform a school garden in Călărași County, creating a welcoming and enjoyable space for the children. This initiative aimed to inspire a love for nature in the younger generation and promote environmental consciousness. Building on these successful partnerships and initiatives, we will continue to seek out and engage in similar projects throughout this year also.

OTP Bank Romania has promoted the bicycle as an ecological means of transport. The bank also organized charity tours attended by amateur and semi-amateur cyclists, most of them employees of OTP Bank Romania. Will you organize such events again?

We are very enthusiastic about the OTP Charity Tour, the sports charitable event we have designed with the goal of promoting cycling as an eco-friendly mode of transport and supporting a charitable cause benefiting children. It is our way of joining together the power of teamwork and collaboration with the responsibility of our role in the community, to produce a social and environmental impact. We are even more happy that in this project we also have huge support from our volunteering partners and clients.

In 2022 we initiated the OTP Charity Tour event with the exact purpose to promote cycling and support a strong community cause, all the donations and proceedings going towards running the Yuppi Associations' experimental therapy camps. For the second edition of the OTP Charity Tour, in May 2023, we succeed again in securing the necessary funds for the cause of the Blondie Association, which works to assist children in need.

As part of our sponsorship program, OTP Bank Romania is also proud to collaborate with various sports teams, thereby contributing to the excitement and engagement of our customers and communities throughout the country.

But we can say that OTP Charity Tour already has a special place in our hearts, and we will remain committed to promoting the bicycle as an ecological means of transportation and organizing charity tours to support charitable causes that positively impact the lives of those in need.

Can you tell us about the charitable projects the bank is involved in?

OTP Bank Romania is deeply committed to supporting charitable projects and making a positive impact on communities. Through our sponsorships and CSR initiatives, we strive to enhance education, promote donations, and encourage volunteering.

During the previous year, the bank sponsored various organizations that catered to individuals facing challenging circumstances. One notable partnership was with the Red Cross for their Good Deeds Auction Campaign, which focused on improving the social, educational, and emotional well-being of marginalized children and young people.

Additionally, we organized the Green Heart Christmas event, the largest charitable gathering supported by OTP Bank Romania for our corporate and private banking customers. This event took place to support the "Gift with a Smile" campaign organized by the Aura Ion Association, and as a result, over 145 children from disadvantaged areas had a memorable Christmas.

We also actively supported charitable causes through various campaigns. For instance, the "Back to School" campaign for disadvantaged children in rural areas, the "Rural Library" initiative, our internal volunteering campaigns during the Easter holidays, or the annual "Spring Sweatshirt" campaign. Furthermore, OTP Bank Romania also facilitated the donation of IT equipment for schools, benefiting 350 children. These charitable projects and initiatives reflect our firm belief in creating a more socially just society and supporting the most vulnerable members of our communities. We remain dedicated to continuing our involvement in such projects, as they align with our core values and contribute to the overall well-being of society.

How do you think the banking sector is doing in achieving the established targets regarding sustainability in Romania? How is the sector in Romania doing compared to other countries?

The banking sector in Romania has made notable progress in aligning its practices to evolving ESG standards and regulations aimed to support the EU's ambitious decarbonization targets. Surely, all banks in Romania have engaged in financing the transition to decarbonization and started monitoring activities and their portfolios from the sustainability perspective also.

While Romania may still have some catching up to do compared to certain Western European countries in terms of sustainable practices, it is important to note that new EU regulations are being introduced to enhance alignment with evolving standards. These regulations will provide a framework for all companies and banks, including the ones in Romania, to further align their operations and reporting of their own contribution to the sustainability evolution.

Just as banks are now transferring risk valuation know-how, important business counsel advice, and financial education knowledge to their individual or corporate clients, the same way they will be expected to play a significant role in advancing sustainability within the local business environment. The collective efforts of banks and the implementation of regulatory measures will contribute to bridging any gaps and fostering progress in sustainability practices across the country.