ESG – Corporate governance and regulation

Corporate governance and regulation

We believe that a well-informed client is the foundation of successful cooperation. This is why we openly share all important information in accordance with current legislation. Our goal is not only to comply with legal requirements, but also to actively promote customer awareness of sustainable and socially responsible investment options. Together, we can contribute to a better future and ensure that our decisions have a long-term positive impact.

Sustainability information in the financial services sector

Dear Clients!

Please familiarise yourself with the information published by UniCredit Bank in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related information disclosure requirements for financial services (the “Regulation”).

The Regulation aims to enhance end-user awareness and promote sustainable, socially responsible investment, and investment that promotes good corporate governance.

Transparency towards investors is a key feature of the Regulation. This involves harmonising the conditions for providing information to end investors in individual Member States. In particular, the European Union wants to provide companies with a framework within which they can offer a wide range of products while complying with sustainable financing rules.

Related agreements implementing ESG policies

On 25 September 2015, the United Nations General Meeting adopted a new global framework for sustainable development: “Agenda 2030”, based on the Sustainable Development Goals. The transition to a low-carbon and more sustainable circular economy with efficient use of resources, in line with the Sustainable Development Goals, is key to ensuring the long-term competitiveness of the Union's economy.

The Paris Agreement, adopted under the United Nations Framework Convention on Climate Change, which entered into force on 4 November 2016, aims to strengthen the response to climate change, including by aligning financial flows with low-carbon and climate-resilient development.

The EU has committed to achieving climate neutrality by 2050. Achieving this goal will involve transforming European society and the economy in a way that is cost-effective, fair and socially balanced. In this context, the Commission presented in 2019 a communication on the European Green Deal, which is to be the EU's new growth strategy, aiming to transform the Union into a climate-neutral, fair and prosperous society with a modern, resource-efficient and competitive economy. Among other things, financial flows need to be redirected towards sustainable investments.

In accordance with the Regulation, UniCredit Bank hereby publishes information on the integration of ESG practices into the investment and insurance advice it provides.

Policy on integrating sustainability risks – valid from 5 November 2021

Reason for update: Addition of a link to the UniCredit Group's remuneration policy

Statement on principal adverse impacts of investment and insurance advice on sustainability factors– valid from 30 June 2023

Reason for update: Amendment of the document in accordance with Commission Delegated Regulation (EU) 2022/1288

Environmentally sustainable economic activities

Taxonomy is a shortened and established name for Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088.

In order toTo achieve its objective of becoming a climate-neutral, fair and prosperous society with a modern, resource-efficient and competitive economy, the European Union needs to redirect financial flows towards sustainable investments.

The financial sector should shift towards green investments to support the transition of the European economy to net-zero emissions. Companies' access to finance will determine the extent to which their activities are aligned with the Taxonomy of Sustainable Investments.

Taxonomy defines the criteria that economic activities must meet in order toto be considered environmentally sustainable.

For the purposes of determining the extent to which an investment is environmentally sustainable, an economic activity shall qualify as environmentally sustainable if that economic activity:

contributes significantly to one or more environmental objectives set out in the Taxonomy,

does not significantly harm any of the environmental objectives set out in the Taxonomy,

is carried out in accordance with the minimum guarantees set out in the Taxonomy,

meets the technical screening criteria established by the European Commission.

The taxonomy sets out the following environmental objectives:

climate change mitigation

climate change adaptation

sustainable use and protection of water and marine resources

transition to a circular economy

pollution prevention and reduction

protection and restoration of biodiversity and ecosystems

The objective of the Taxonomy is to provide businesses and investment companies with an overview of which activities and sectors the European Union considers to be “green“.

Sustainability in investment services

The financial world has undergone significant changes and shifts in values in recent years. In addition to performance, investors now also attach importance to the environmental, social and ethical impact of investments themselves. To enable investors to make sufficiently informed decisions and to identify and compare sustainable products more easily, the European Union

adopted an action plan for sustainable finance to redirect capital flows towards sustainable investments

implemented various guidelines, regulations and tools towards greater transparency and awareness in the area of sustainability

committed to sustainable goals and to increasing its responsibility in the area of ESG.

Due to the growing ESG trend, the European Union has amended regulations in the area of investment services (MiFID regulatory framework):

Commission Delegated Regulation (EU) 2021/1253 of 21 April 2021 amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors and sustainability-related risks and preferences into certain organisational requirements and operating conditions for investment firms
Commission Delegated Directive (EU) 2021/1269 of 21 April 2021 amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors into product governance obligations

The intention is to expand the information obtained from clients to include their preferences in the area of sustainability.

When providing investment advice, the Bank will also take into account sustainability preferences, if any, when assessing suitability.

Similarly, when managing products, i.e., when determining the target market, the Bank will take into account the client's preferences in terms of sustainability.

If the client does not declare any preferences in the area of sustainability, the Bank will be able to offer or recommend financial instruments to the client without taking into account sustainability characteristics and features.

Sustainable investments

Investment in economic activities that contribute to environmental objectives, such as investments measured, e.g., by key indicators for resource efficiency in terms of energy use, energy from renewable sources, raw materials, water and land, waste production, greenhouse gas emissions, or indicators of its impact on biodiversity and the circular economy, or investment in economic activities that contribute to social objectives, in particular investment that contributes to addressing inequalities, or investment that promotes social cohesion, social inclusion and labour relations, or investment in human capital or economically or socially disadvantaged communities, provided that such investments do not significantly harm any of the objectives and societies in which the investments are made, and comply with good governance practices, in particular with regard to sound management structures, relations with employees, remuneration of relevant employees and compliance with tax regulations

Sustainability factors

Environmental, social and employee issues, respect for human rights, and anti-corruption and anti-bribery issues

Riziko týkajúce sa udržateľnosti

Udalosť alebo situácia v oblasti životného prostredia alebo sociálnej oblasti alebo v oblasti správy a riadenia, ktorá by v prípade, že by nastala, mohla mať skutočný alebo možný významný nepriaznivý vplyv na hodnotu investície.

Sustainability preferences

The choice of the customer or potential customer as to whether, and if so to what extent, one or more of these financial instruments should be incorporated into their investment:

a financial instrument for which the customer or potential customer specifies that a minimum proportion is invested in environmentally sustainable investments within the meaning of the Taxonomy,
a financial instrument for which the customer or potential customer specifies that a minimum proportion is invested in sustainable investments,
a financial instrument that takes into account the main adverse impacts on sustainability factors, with qualitative or quantitative elements demonstrating the consideration taken being determined by the customer or potential customer.

Sustainability in insurance

As with investments, the EU has also updated regulations on the distribution of insurance-based investment products:

Commission Delegated Regulation (EU) 2021/1253 of 21 April 2021 amending Delegated Regulations (EU) 2017/2358 and (EU) 2017/2359 as regards the integration of sustainability factors and sustainability-related risks and preferences into the product oversight and governance requirements for insurance undertakings and insurance distributors and into the rules for the conduct of business and investment advice for insurance products with investment components

The intention is to expand the information obtained from clients to include their preferences in the area of sustainability.

When providing insurance advice, the Bank will also take sustainability preferences into account when assessing suitability, if the client has any.

Similarly, when managing products, i.e., when determining the target market, the Bank will take into account the client's preferences in terms of sustainability.

Sustainable investments

Investment in economic activities that contribute to environmental objectives, such as investment measured, for example, by key indicators for resource efficiency in terms of energy use, energy from renewable sources, raw materials, water and land, waste production, greenhouse gas emissions, or indicators of its impact on biodiversity and the circular economy, or investment in economic activities that contribute to social objectives, in particular, investment that contributes to addressing inequality, or investment that promotes social cohesion, social integration and labour relations, or investment in human capital or economically or socially disadvantaged communities, provided that such investments do not significantly harm any of the objectives mentioned above and that the companies in which the investments are made comply with sound management and governance practices, in particular with regard to sound management structures, relations with employees, remuneration of relevant employees and compliance with tax regulations

Sustainability factors

Environmental, social and employee issues, respect for human rights, and anti-corruption and anti-bribery issues

Sustainability risks

An event or situation in the environmental, social or governance area which, if it occurred, would have a real or potential significant adverse impact on the value of the investment.

Sustainability preferences

The choice of the customer or potential customer as to whether, and if so to what extent, one or more of these financial products should be included in their investment:

insurance product with an investment component where the customer or potential customer specifies that a minimum proportion is invested in environmentally sustainable investments within the meaning of the Taxonomy,
insurance product with an investment component where the customer or potential customer specifies that a minimum proportion is to be invested in sustainable investments,
insurance product with an investment component that takes into account the main adverse impacts on sustainability factors, with the qualitative or quantitative elements demonstrating such consideration being determined by the customer or potential customer.

The Bank will not tolerate any involvement of its employees or third parties in any relationship with the Bank in corrupt practices, whether direct or indirect.

Complete anti-corruption rules

Client identification and money laundering prevention

We hope for mutual understanding, helpfulness and trust in the implementation of the requirements imposed on the Bank by the Act, laying down the framework for mutual successful negotiations.

CUSTOMER DUE DILIGENCE INFORMATION FOR CLIENTS

When providing its services, the Bank applies the rules, principles, procedures and control measures when combating money laundering and terrorist financing, which result from the following legislation:

Act No. 483/2001 Coll., on banks – this Act lays down the conditions for the performance of the bank's activities;
Act No. 297/2008 Coll., on protection against money laundering and terrorist financing (hereinafter referred to as “Act No. 297/2008”); • Act No. 289/2016 Coll., on the implementation of international sanctions.

International sanctions represent a set of restrictive measures used by the international community (UN, EU) as a tool to maintain or restore international peace and security, to protect fundamental human rights and to fight terrorism. In this respect, the Bank is obliged to comply with restrictions or prohibitions on the provision of any benefits to entities subject to international sanctions, the conclusion of transactions with them, including foreign-currency transactions, transfers of funds, etc. In these cases, the Bank is obliged to refuse to enter into a business relationship or to terminate the business relationship, if any, or refuse to carry out a particular transaction. These measures aim to prevent and detect money laundering and financing of terrorism. We have selected for you some of the obligations imposed on us by law and with regard to which our RM may contact you in relation to identification or update of KYC.

Client identification

The obligation to identify the client arises from Section 7 Identification of Act No. 297/2008 Coll. This obligation to undergo regular checks of the validity and completeness of data applies to every client who establishes a contractual relationship with the bank or prepares or carries out a transaction with the bank.

Requirements by type of entity:

Natural person (non-entrepreneur) – name, surname, birth registration number or date of birth, if birth registration number has not been assigned, address of permanent residence or other residence, nationality, type and number of identity document,
Natural person entrepreneur – identical data as for natural person (non-entrepreneur) + identification of the address of the place of business, address of the actual place of business activity, if different from the address of the place of business, IČO – if assigned, designation of the official register or other official record in which this entrepreneur is registered, and the number of entry in this register or record,
Legal person or property association/trust – identification of the name, registered office address, address of the actual place of business activity, if different from the address of the registered office, IČO, designation of the official register or other official record in which the legal person or property association is registered, the number of entry in this register or record and identification of the natural person who is authorized to act on behalf of a legal entity or property association,
A person who is represented - finding out his/her data according to the above points and finding out the data of a natural person who is authorized to act on behalf of this legal entity or natural person to the extent of the data as for a natural person and submitting the authorization to represent,
A minor who does not have an identity document - finding out the name, surname, birth number or date of birth, if a birth number has not been assigned, permanent residence or other residence, nationality of the minor and data of his/her legal representative as for a natural person.

Except for exceptions defined by law, identification or its verification must be carried out in the physical presence of the client, with a natural person presenting an identity card during identification and a legal person presenting a document proving its existence. The Bank is authorized to make copies/scans of documents submitted for identification, even without the consent of the persons concerned (Section 19(1) of Act No. 297/2008 Coll.).

Customer due diligence

The Bank is obliged to perform due diligence in relation to the client based on Section 10 of Act No. 297/2008 Coll. for the purposes of identifying and recording data necessary for assessing the possible risk of money laundering and terrorist financing.

Depending on the type of entity, the bank is obliged to verify the client in the following scope, in addition to identification and verification (Section 10, paragraph 1 of Act No. 297/2008 Coll.):

identification of the ultimate beneficial owner (UBO) and taking appropriate measures to verify information related to the identification of the ultimate beneficial owner, including measures to determine the ownership structure and management structure of the client, who is a legal entity or association of assets; When verifying information related to the identification of the ultimate beneficial owner, the obliged entity may not rely solely on data obtained from the register of legal entities, entrepreneurs and public authorities if, based on the risk assessment pursuant to Section 20a, there is a higher risk of money laundering or terrorist financing and is obliged to verify information related to the identification of the ultimate beneficial owner from another reliable source,
obtaining and evaluating information on the purpose and planned nature of the transaction or business relationship and information on the nature of the client's business for the purpose of understanding the nature of the business, ownership structure and management structure of the client,
determining whether the client or the client's UBO is a politically exposed person or a sanctioned person,
depending on the risk of money laundering or terrorist financing, determining the origin of funds or assets in the transaction or business relationship,
determining whether the client is acting in his own name,
carrying out ongoing monitoring of the business relationship, including reviewing specific transactions carried out during the duration of the business relationship for the purpose of determining, whether the transactions carried out are in accordance with the knowledge of the obliged entity about the client, his business profile, an overview of possible risks associated with the client and with the source of funds and assets used in the business relationship or transaction, and ensuring the updating of documents, data or information that the obliged entity has at its disposal about the client.

According to the provisions of Section 10, paragraph 5 of the cited Act, the client is obliged to provide the bank with information and documents that are necessary for performing due diligence (according to the points mentioned above) in relation to the client, or identification and verification of identification.

When performing increased due diligence pursuant to Section 12 of the cited Act, the bank, as part of the measures carried out, also collects additional information for the correct assessment and evaluation of the risk - one of them is the detection of an ownership structure exceeding the 10% threshold.

Non-completion of a transaction

According to Section 15 of Act No. 297/2008 Coll., the bank is obliged to refuse to conclude a business relationship, terminate the business relationship or refuse to execute a specific transaction,

if for any reason it cannot perform due diligence in relation to the client to the extent pursuant to Section 10, paragraph 1 of the cited Act, or
if the client refuses to prove on whose behalf he is acting.

Beneficial owner

A beneficial owner is defined in Article 6a “Beneficial Owner”.

MANDATORY IDENTIFICATION DATA ON THE BENEFICIAL OWNER

For the purposes of this Act, the identification of a beneficial owner means the ascertainment of name, surname, birth certificate number or date of birth, if no birth certificate number has been assigned, permanent or other residence address and nationality.

INTERMEDIATE SHAREHOLDERS / FIRST SHAREHOLDERS

In case of legal entities and trusts, as mentioned above, the Bank is obliged to ascertain information about the customer's ownership and control structure – its intermediate shareholders, including the shares in per cent. An intermediate shareholder shall mean a legal entity that owns or controls a share of at least 25% in the ownership structure between the customer and its beneficial owner.

For these legal entities, the Bank is obliged to ascertain the following data:

name of the legal entity,
ID No.,
registered office address.

The term first shareholder is used by the Bank to identify the first shareholder in the customer’s ownership structure. Additionally, as regards first shareholders, the Bank also ascertains the identification data of the statutory body (natural person – for the scope, see above as with the customer).

POLITICALLY EXPOSED PERSONS (PEPS)

A PEP is defined in Article 6 “Politically Exposed Person”.

Origin of assets and funds

The Bank is obliged to obtain information from clients, including at any time during the course of a business relationship, about the origin of funds or assets used in a transaction or business relationship.

This can be demonstrated for legal entities, e.g. by contractual documentation, accounting documentation, financial statements, annual report, merger/acquisition documents, etc.; for individuals, e.g. by income from a profession, business, credit, loan, dividends paid, purchase and sale agreement or other agreement, etc.; always depending on the specific situation.

UniCredit Bank Czech Republic and Slovakia, a.s. (hereinafter referred to as "Bank") supports and develops a corporate culture characterised by honesty and openness, in which all employees and other associates have the opportunity and the right to freely express opinion and disagreement with unacceptable conduct, without fear of recourse, and when they can be sure of a proper and fair investigation of the announcements made.

The main purpose of this policy and the principles embeded in it is to detect and prevent wrongdoing that could harm the public interest or the mission and reputation of the Bank as well as the UniCredit Group.1

PRINCIPLES

The whistleblower may be any employee and other associate of the Bank (e.g. self-employed, member of the body, shareholder, intern, contractor's employee).

Whistleblowers who suspect that unlawful, unfair, unethical or otherwise harmful conduct has occurred or may occur have the opportunity to report their suspicions without fear of any adverse effects on whistleblowers.

Non-anonymous reports are preferred. Confidentiality about the identity of the person who initiated the complaint is guaranteed.

All reported suspicions of unacceptable behaviour will be assessed fairly, impartially, objectively and will be properly, fairly and confidentially investigated.

In the event of verified merits of a report of unacceptable behaviour, the Bank shall take appropriate measures to correct unacceptable behaviour and avoid reoccurrence.

The rights of those affected by reported suspicions will be respected and protected.

Whistleblower must be genuinely conviced that the information provided is true at the time of submission of the report. Persons knowingly making false reports will not be granted protection.

EXTENT

These principles apply to any unacceptable behaviour, which is understood to mean any action or failure by the Bank or an employee of the Bank, which could harm the public interest or the mission or reputation of the Bank as well as UniCredit Group. That is unlawful, unfair or unethical conduct in the Bank's business as well as non-compliance with all UniCredit Group rules and regulations.

RIGHTS OF WHISTLEBLOWERS

The Bank guarantees the whistleblower protection from any penalty due to report. The Bank does not tolerate threats and any form of retaliation against the whistleblower or those who cooperated to verify the merits of the complaint.

The bank guarantees the anonymity of the whistleblower unless the whistleblower has given his or her explicit consent to reveal his or her identity or the legislation so requires.

Should the whistleblower be exposed to any disadvantage stemming from the notification, the Bank will provide appropriate assistance to the whistleblower in order to eliminate any negative impact on the whistleblower.

The whistleblower is entitled to information about the outcome of the investigation.

REPORTING PROCEDURE

If an employee or other associate of the Bank has a reasonable suspicion of the occurrence of unacceptable conduct, or the occurrence of such conduct is likely in the future, and does not wish or cannot address such suspicion along the management line, the whistleblower has the option to approach the Compliance Unit manager(s) with suspicion or, if the notification relates to that person, also to the Internal Audit Service manager(s). Should the unacceptable behaviour concern the aforementioned persons, the staff member may report his suspicions directly to the members of the Board of Directors of the Bank.

In order to investigate the reported suspicions thoroughly, the report should contain in particular the following information:

a description of perceived unacceptable behaviour with all the material facts known,
identification of the people involved, including any witnesses,
an indication of the department where the case occurred,
supporting documents to support suspicions
whether the whistleblower has discussed the matter with other persons and their identification,
how the v became aware of the matter,
the whistleblower 's name, surname and contact details.

Suspicions may be reported:

via e-mail to address: whistle-blowing@unicreditgroup.cz
via The Speak Up service:
- web interface:
  https://unicreditbankczechrepublicandslovakia.speakup.report/czechandslovakia - Czech Republic and Slovakia – access code 126204
- download app:
- phone line:
  800 050 833 – Czech Republic and Slovakia

The access code is the same for all users. Upon leaving the complaint, the whistleblower will receive a unique code to return to the system, establish compliance feedback, and develop solutions to the complaint.

in writing by sending to:
Lucien Strnad
lucien.strnad@unicreditgroup.cz
útvar Compliance, 15C
UniCredit Bank Czech Republic and Slovakia, a.s.
BB Centrum - Filadelfie
Želetavská 1525/1
140 92 Praha 4

by inserting a writing into the secure "Whistleblowing" box at:
UniCredit Bank Czech Republic and Slovakia, a.s.
BB Centrum - Filadelfie
Želetavská 1525/1
140 92 Praha 4
15D

face-to-face interview at the above address

INVESTIGATIon of UNACCEPTABLE BEHAVIOUR

The Compliance Unit manager shall arrange his own investigation in accordance with the rules laid down. All necessary steps shall be taken in the course of the investigation to ensure a fair and unbiased investigation.

The whistleblower shall be notified of receipt of the report within 7 days, unless he requests not to be notified. Nor is he notified if it leads to the disclosure of his identity.

Investigations shall be conducted with due diligence and within a reasonable time (maximum three times 30 days) that the whistleblower is informed of, where possible, while maintaining confidentiality about the whistleblower of unacceptable behaviour as well as the persons affected by the complaint. The outcome of the investigation is a report summarising the course of the investigation and the evidence, drawing conclusions on the extent and seriousness of unacceptable behaviour and recommending appropriate measures to correct unacceptable behaviour and avoid future reoccurrence. The whistleblower shall be informed of the outcome of the investigation within the period mentioned above.

The detailed arrangements for investigating unacceptable behaviour and related aspects of whistleblowing are contained in internal regulation 3220_ER_015 – Reporting obligations to Compliance and whistleblower protection.

EXTERNAL REPORT

If, for some reason, the whistleblower does not want or cannot use the internal notification system mentioned above, it is also possible to contact:

1) Ministry of Justice on matters relating to the bank's operations in the Czech Republic: Chci podat oznámení – veřejnost – Oznamovatel (justice.cz)

2) Office for the protection of whistleblowers in matters relating to the bank's operations in Slovakia: Chcem oznámiť - Úrad na ochranu oznamovateľov (oznamovatelia.sk)

In accordance with Act No. 171/2023 Coll., on the protection of whistleblowers and with Act No. 54/2019 Z. z., on protection of whistleblowers about anti-social activities