Integrated Report 2020

ESG risk management

BNP Paribas Bank Polska S.A. has developed a risk identification and assessment framework in response to the requirements of the supervisory review and evaluation process. Considering the regulatory requirements, best practices and the use of the Bank's proven existing risk management processes, the framework aims to identify and assess all risks to which the Bank is or may be exposed, and allows the Bank to maintain an up-to-date list of risks in its operations. The principles developed are common to all risks.

  • 102-11
  • 102-15
  • TCFD Risk Management Disclosure A
  • TCFD Risk Management Disclosure B
  • TCFD Risk Management Disclosure C

The Bank has risk- related units that:

  • address the ESG aspects and climate risks included into the Bank’s risk appetite,
  • pay particular attention to possible ESG risks in the business of existing and potential corporate Clients, integrating this aspect into the overall risk analysis of the Client’s business or prospectus.

Both the Management Board and the Supervisory Board, as well as the entire management team, are engaged in a risk management system aimed at identifying and reducing all risks relating to the Bank’s activities, including risks and opportunities related to climate change.

The identification of risks is performed at least once a year. Risks are characterised and assessed using a quantitative method, considering three parameters: risk type, risk factors that constitute direct causes of risk and type of impact of a risk event (financial impact or qualitative assessment), using a common risk identification tool for all risk types. BNP Paribas Bank Polska S.A. has developed an internal taxonomy of risks covering all types of risks it may experience in the course of its business. The purpose of building the risk taxonomy is to address all typical risks to which the Bank is or may be exposed, taking into account its business model, activities and environment. Identification consists of recognizing, defining and describing the types of risk that may threaten the achievement of the Bank’s objectives. The Bank identifies risk events that correspond to scenarios of how a given risk type may materialise. The internal risk taxonomy covers all potential risks and is not limited to significant risks for the Bank. The taxonomy is not static and may evolve in line with methodological developments, the emergence of new risks or regulatory requirements.

The Bank has also developed a taxonomy of risk factors to detail the causes/factors underlying the materialisation of risk events. Risk factors are understood as the direct causes to the increase of the risks. The taxonomy divides risk factors into four groups according to the area of their origin:

  • financial markets,
  • macroeconomic environment,
  • business environment,
  • external processes.

The types of risks identified as potentially material are analysed in terms of their materiality – the result is a list of material risks.

To assess the materiality of the risks, BNP Paribas Bank Polska S.A. performs the following actions:

  • defines the concept of risk materiality,
  • defines the factors determining the risk materiality,
  • assesses the risk materiality,
  • prepares a report on the assessment of the risk materiality.

In 2020, BNP Paribas Bank Polska S.A. reviewed its risk identification process as regards inclusion of risk events and climate-related risk factors in the process. As a result of this, ESG risks were assessed as material for the Bank and were introduced into the Risk Management Strategy. As a next step, in order to mitigate and control the risk, the Bank developed principles for measuring ESG risk in the process of determining the Bank’s internal capital (ICAAP). The capital plan of BNP Paribas Bank Polska S.A. for 2021-2023 was supplemented with limits for ESG risk determined based on the risk measurement performed.

ESG risk include:

Associated with conducting operations in an environtmentally harmful manner, causing the effects of environmental damage and disasters, as well as risks associated with the challenges and adaptation to ongoing climate change;

Associated with operating in a manner harmful to employees, local communities and society (human rights, labour rights, respect for health and safety);

Related to unethical and unfair business practices and non-compliance with corporate governance standards (code of ethics, grievance and whistleblowing mechanisms, transparency of information, prevention of fraud and corrupt practices, CSR/ESG risk control system, supply chain requirements).

BNP Paribas Bank Polska S.A. has identified nine sensitive sectors based on environmental, social or corporate governance risk:
  • coal energy (coal exit 2030)
  • mining (coal exit 2030)
  • defence and security
  • forest – wood pulp
  • forest – palm oil
  • nuclear
  • agri-food
  • fuel – unconventional oil and gas resources
  • tobacco


In each of these sectors, the Bank implements CSR Policies towards the relevant Clients. In order to become a Client of the Bank or obtain financing, an entity must comply with a number of requirements regulated by the Policy for a given sector. With regard to sectors that are particularly harmful in terms of sustainable development, the Bank takes strategic decisions to exit from serving Clients belonging to these sectors. Such sectors include the tobacco sector, in case of which the BNP Paribas Group announced its exit from financing in 2017.

Another is the coal energy sector. Since 2015, the Bank is in the process of exiting the financing of the coal energy sector and is not providing new financing to coal energy groups, continuously tightening regulations in this area.

In 2019, BNP Paribas Group adopted final deadlines (2030 for the European Union and OECD and 2040 for the rest of the world) after which BNP Paribas Clients involved in coal energy, mining or coal infrastructure wishing to remain in a relationship with the Bank will no longer be able to use coal. BNP Paribas has committed that it will not engage with new Clients if coal-related activities generate more than 25% of their revenues. In addition, the BNP Paribas Group maintains its commitment to terminate cooperation with any Customer that builds new coal-based generation capacity.

All current and potential Clients of the Bank operating in the listed industries are informed about the CSR Policies and receive an explanation of the analysis process.

For more information on the CSR Policies, please refer to the Responsible Financing chapter.

In addition to the cyclical analysis of risks in particularly sensitive sectors, the Bank assesses ESG risks as part of the lending process to all corporate Clients. In 2019, a second line of CSR control was established in the CIB and Corporate Risk Division, which integrates the assessment of the occurrence of ESG risks in existing and potential Clients into the overall risk analysis of the Client’s business. If a high level of ESG risk is identified, the Client’s rating may be downgraded.

Regulatory risk, resulting from changes in the legal environment related to ESG strategy is also an important aspect for BNP Paribas Bank Polska S.A. The Bank monitors the work of supervisory authorities and legislative proposals in the financial sector on an on-going basis to ensure adequate risk management and control. The Bank recognises changes in the ESG area and accepts that they will have a significant impact on its operations.

BNP Paribas Bank Polska S.A. is aware that the European Union and the whole world are increasingly confronted with the disastrous and unpredictable consequences of climate change, depletion of natural resources and other issues related to sustainability development. This will mean that radical action will have to be taken also through the entities in the financial services sector. In the Bank’s opinion, sustainability development is the foundation for building a low-carbon economy, and the role of financial institutions in this process is of special importance.

BNP Paribas Bank Polska S.A. analyses the possible impact of climate change trends by identifying opportunities and threats to its business and development prospects. To this end, it has distinguished climate-related risks and opportunities in the short, medium and long term.

For more information, please refer to Environmental responsibility management.

The Bank has implemented effective systems of functional control, risk management, compliance supervision, as well as audit and internal control. The simultaneous functioning of all the above-mentioned elements enables the Bank to exercise constant and effective supervision in the area of anti-corruption. Since 2018, the Bank has had an Anti-Corruption Policy in place. As part of the anti-corruption process, the Bank monitors, inter alia: indicators on reported cases of fraud, identified conflicts of interest, accepted/transmitted gifts and invitations, due diligence in establishing relations with Clients/contractors/intermediaries, level of employee awareness. The Bank’s anti-corruption system is based on:


  • internal regulations specifying how to act and how to report corruption incidents to the relevant organisational units of the Bank,
  • trainings for employees which increase their awareness and indicate how to act in specific situations,
  • operational control within the implemented system of internal control.

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