Banque Internationale à Luxembourg

Corporate Governance of BIL Group

The corporate governance of BIL Group is articulated around the following organs:

A. GENERAL MEETING OF SHAREHOLDERS (GM)

The General Meeting of Shareholders has the widest powers to adopt or ratify any action related to BIL Group. The annual GM receives a management report from the Board on the Bank's activities in the previous financial year and approves the balance sheet and profit and loss account. The annual GM also appoints the Directors and, where necessary, their replacements, while respecting legal provisions regarding the representation of salaried staff and the statutory right for directors to appoint a new director temporarily in case of vacancy.

B. BOARD OF DIRECTORS (THE BOARD)

The Board has overall responsibility for BIL Group and is tasked with defining, monitoring, and ensuring the implementation of robust governance and internal control arrangements for sound and prudent management of the Bank. Among its missions, the Board is responsible for setting and overseeing the overall business and risk strategy, including the Risk Appetite Statement and Framework of BIL Group.

The Board is assisted by four specialised committees:

• Board Audit and Compliance Committee (BACC): Monitors and controls effective implementation and adherence to the Bank's approved charters, policies, accounting standards, and legal and regulatory requirements.
• Board Risk Committee (BRC): Ensures that all material risk matters are addressed and oversees current and anticipated risks within the BIL Group that could jeopardise financial and liquidity capacities.
• Board Remuneration and Nominations Committee (BRNC): Focuses on nomination and remuneration matters, assisting the Board in defining a global Remuneration Charter and advising on the suitability assessment and appointment/dismissal processes for Board and Management Board members.
• Board Strategy Committee (BSC): Assists the Board in setting strategic direction, advising on the Bank's overall strategy and budget, and providing recommendations.

C. MANAGEMENT BOARD (MB) AND EXECUTIVE COMMITTEE (EXCO)

The Board of Directors delegates the daily management of the Bank to the Management Board (MB), which consists of members authorised by the European Central Bank. The MB leads, directs, and manages BIL Group, implementing the strategy and achieving business objectives in line with the risk appetite set by the Board.

The ExCo comprises Authorised Managers and heads of support functions and business lines, chaired by the CEO. The Chief Compliance Officer and Chief Internal Auditor are permanent invitees to the ExCo.

Board Composition

Management body expertise on sustainability matters

The knowledge and experience of climate-related and environmental risk is one of the criteria assessed in the context of the individual and collective suitability assessment exercise, both when on-boarding a new member and on an annual basis. During this exercise, not only is each member asked to self-assess the level of his/her knowledge in this matter but the Bank, through its Board Remuneration and Nomination Committee, and ultimately the Board of Directors, proceeds to its own assessment both at individual and collective level.

In addition to being provided with relevant trainings, the management body receives regular expert updates on how the Bank performs in sustainability-related matters. Having a management body with an appropriate understanding and expertise of sustainability-related matters ensures that this topic is considered when discussing impacts, risks and opportunities.

Information Flow to Administrative, Management and Supervisory Bodies

The administrative, management, and supervisory bodies are regularly informed about sustainability matters through structured reporting mechanisms. Specifically, the ESG Strategic Steering Committee, the Executive Committee and the Board of Directors receive comprehensive updates on a regular basis. ESG matters are also addressed in specific management committees such as the Asset and Liability Management (ALM) Committee or the Credit Committee.

The ESG Strategic Steering Committee

To strengthen ESG governance, the ESG Strategic Steering Committee oversees the ESG Programme implementation, which covers all ESG projects at BIL. The ESG Strategic Steering Committee is composed of seven permanent members, all members of the Executive Committee (including four members of the Authorised Management), and the Group Head of Sustainability.

In 2024, the ESG Strategic Steering Committee convened seven times, with one meeting conducted via circular mail.

The Executive Committee

A regular update of the ESG Strategic Steering Committee is provided to the Executive Committee on a quarterly basis. The ESG Dashboard is presented to the administrative, management and supervisory bodies every six months.

The ESG Dashboard provides a comprehensive overview of BIL's climate change impact, emphasising its operational carbon footprint and financed emissions. It also highlights ESG risks and opportunities associated with the Bank's activities that are most vulnerable to environmental and climate-related challenges, including its real estate portfolio, corporate loan portfolio, banking investment portfolio, and customer investment portfolio.

Board of Directors' involvement in ESG matters

The ESG strategy is fully integrated into the Bank's Energise Create Together 2025 (ECT2025) corporate strategy and is therefore monitored by the Board of Directors. Indeed, the Board of Directors defines and oversees the implementation of the ESG strategy: targets and ambitions, risk appetite and risk approach, evolution of sustainable finance initiatives and the progressive integration of ESG considerations in policies and processes.

• A quarterly update on the implementation of the ESG strategy is included in the ECT2025 dashboard and presented to the Board of Directors / Board Strategy Committee.
• A more detailed report on the ESG Programme is presented to the Board of Directors on a quarterly basis. The ESG Dashboard is presented every 6 months.
• The Risk Dashboard is presented quarterly to the Board.

In 2024, BIL's Transition Plan was reviewed and approved in a dedicated meeting with the ExCo and the Board of Directors.

Developing ESG expertise within Governance bodies

To strengthen the governance and to ensure the management bodies have the adequate competencies to address ESG matters, the Executive Committee and Board received regular training on ESG topics. In 2024, the training included:

• A dedicated session on the amendments to the Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD)
• A session focused on regulatory expectations related to diversity and best practices in the market
• A session that concentrated on green and transition financing, aligning with BIL's Transition Plan and climate targets

Consideration of Impacts, Risks and Opportunities

The administrative, management, and supervisory bodies at BIL actively consider impacts, risks, and opportunities related to sustainability when overseeing the Bank's strategy, major transactions, and risk management processes. The Board of Directors and the Executive Committee assess how sustainability initiatives fit within the Bank's overall strategy.

ESG risks are incorporated into the Bank's comprehensive risk management framework and are presented through both the ESG Dashboard and the Risk Dashboard. This enables the administrative, management, and supervisory bodies to review ESG-related risks during their regular assessments and to address potential challenges and seize opportunities effectively.

Material Impacts, Risks and Opportunities Addressed

During the reporting period, the administrative, management, and supervisory bodies focused on several short-term material impacts, risks, and opportunities related to sustainability:

1. ESG Training: Implemented training programs to enhance understanding of ESG principles across the organisation
2. Climate Risks and Financed Emissions: Evaluated the implications of climate risks and assessed the Bank's financed emissions
3. Evolution of Investment Decision Processes and ESG Integration: Reviewed the ongoing evolution of investment decision-making processes
4. Regulatory Compliance: Monitored evolving regulations related to sustainability
5. Implementation of ESG MiFID Requirements: Monitored the progress of implementing ESG requirements under the MiFID framework
6. EPC Collection Strategy: Discussed strategies for collecting Energy Performance Certificates
7. CSRD Preparation: Prepared for compliance with the Corporate Sustainability Reporting Directive

BIL's Remuneration Charter and associated practices are aimed at defining remuneration structures that protect the interests of its clients, suppliers, employees, and shareholders, while ensuring the Bank's financial sustainability over the long term.

For the majority of BIL's staff members, variable remuneration is discretionary and is determined based on a reference amount. The bonus reflects the outcomes of the year-end performance review. Incentive schemes are designed to foster a culture of accountability and performance, while also aligning with the Bank's core values of "caring, leading, engaging, accessible, and reliable".

BIL has established Environmental, Social, and Governance (ESG) objectives. These objectives are progressively cascaded down from the Executive Committee (ExCo) to people managers and relevant functions, such as those in the investment office. Performance is assessed from two perspectives:

• "What": This refers to specific targets, including a mix of individual, collective, financial, and non-financial targets.
• "How": This dimension considers adherence to BIL's values, emphasising care, compliance, and business ethics.

Sustainability-related performance metrics are included in both the "What" and "How" aspects of performance assessment. This ensures that while individual performance is measured, it does not incentivise behaviours that could lead to conflicts of interest. By avoiding purely quantitative commercial criteria, ethical decision-making aligned with the long-term goals of the Bank is encouraged.

At this stage, there is thus an indirect link between variable pay and sustainability-related targets, reflecting BIL's commitment to embedding ESG considerations into its performance evaluation processes.

Examples of ESG Objectives by Department:

Throughout the organisation, various departments are tasked with setting and achieving specific ESG objectives, including:

• Risk: Proactively managing ESG risks and integrating climate capabilities into existing frameworks.
• Procurement: Managing supply chain ESG risks by ensuring BIL does business with suppliers with consistent values and standards.
• IT: Deploying IT assets to help the rest of the firm develop innovative ESG products and respond to regulatory requirements, notably reporting.

Core Elements of Due Diligence

BIL has established a comprehensive risk management and internal control system specifically tailored for sustainability reporting. This system is governed by a centralised Sustainable Development Team that leads the sustainability reporting process and ensures compliance with relevant regulations.

Key components include:

Governance and Oversight

The ESG Strategic Steering Committee oversees the non-financial reporting process, providing regular updates to senior management, including the Executive Sponsor (Head of Strategy, SGO, and Balance Sheet Management) and the Executive Committee.

Timetable and Accountability

The Sustainable Development and Finance departments have developed a detailed timetable that outlines internal deadlines and identifies key contributors for the non-financial reporting process, ensuring accountability and timely delivery.

Internal Audit Assessment

The activities of the Bank have been split-up in 'audit units'. The list of all audit units is called the 'audit universe'. All audit units are included in the pluri-annual audit plan, scored and audited as foreseen in the methodology. The frequency of review is linked to the scoring of the audit unit that is calculated on a yearly basis through the risk assessment exercise. ESG is part of the audit universe. In 2024, the internal audit function assessed the risks and internal control systems relating to the production of BIL's Non-Financial Reporting (NFR), with findings reported to senior management to promote continuous improvement and accountability.

Risk Assessment Approach

The risk assessment approach on sustainability reporting involves a thorough evaluation of risks associated with non-financial reporting. Key risks are identified through discussions with internal and external auditors, as well as external ESG reporting experts. Periodic assessments of regulatory compliance are conducted to identify and address potential gaps effectively.

Key risks identified in the sustainability reporting process include:

• Data Accuracy and Completeness: Mitigated through a two-level control framework that ensures the reliability and timeliness of reported data. A dedicated reporting tool enhances data collection processes, including stakeholder identification and real-time monitoring.

• Regulatory Compliance Risks: Addressed by pursuing adherence to the Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS), with external support utilised to close identified gaps.

• Governance Risks: Managed through the establishment of clear roles and responsibilities within the ESG governance structure, promoting accountability and effective oversight.

• Methodology Coherence: The methodology behind the Double Materiality Assessment is documented and periodically reviewed by both internal and external auditors to ensure consistency and transparency.

Integration and Reporting

The findings from risk assessments and internal controls are integrated into relevant internal functions through:

• Cross-Departmental Collaboration: Regular engagement meetings ensure that all stakeholders are aware of their responsibilities and adequately prepared for disclosures.

• Four-Eyes Control: Information undergoes validation through a hierarchical review process, ensuring accuracy and accountability at the N-1 level of Executive Committee.

• Regular Updates to the ESG Strategic Steering Committee: Progress on the reporting process and the CSRD project is communicated routinely to the ESG Strategic Steering Committee.

The results of risk assessments and internal controls are reported periodically to the administrative, management, and supervisory bodies through:

• Status of Internal Assessments: Updates on findings from internal audits are provided to ensure transparency and informed decision-making.

• External Assessment: A third-party external assurance provider conducted a gap assessment to evaluate overall compliance with the CSRD, assess the effectiveness of certain data collection processes, and ensure adherence to the EU Taxonomy.

This structured approach ensures that BIL's sustainability reporting is thorough, compliant, and effectively managed, fostering a culture of accountability and continuous improvement within the organisation.

Strategy, Business Model and Value Chain

Significant Groups of Products and Services Offering

Sustainable Financing Initiatives

Real Estate Financing

Green Loans

BIL currently offers two specific sustainable financing products:

• low-interest climate loans – loans subsidised by the Luxembourg government to encourage energy retrofitting; and
• renewable energies loans – special preferential rate loans to finance the installation of solar panels, heat pumps and geothermal systems (especially for retail clients).

However, most of BIL's sustainable financing comes through more traditional products such as mortgages and consumer loans for individuals, and business loans for corporate and institutional clients.

BIL is trying to progressively raise the quality of its non-financial data in order to better identify its sustainable financing in the future; for example, in 2024, better identification has been carried out internally to be able to allocate loans for energy renovation.

Energy Performance Certificate (EPC) Collection Process

From the last quarter of 2023, BIL has required an EPC for any new residential property used as a collateral to secure a loan. This document is mandatory, influences the credit rate and must be submitted before the loan is provided. In 2024, the emphasis has been placed on implementing a plan to remediate energy performance certificates from the stock of existing credits.

Motor Vehicle Financing

BIL supports e-mobility by offering special terms for the financing of 100% electric vehicles on both consumer loans for retail clients and on finance leases for business clients provided through BIL Lease.

Corporate Lending

Apart from the renewable energy loans, most of BIL's sustainable financing for corporate and institutional client comes through more traditional products such as business loans or finance leases. BIL is trying to raise the quality of its non-financial data in order to better identify its sustainable financing in the future. BIL has planned to define a green loan framework by 2025 in order to define what type of financing will be considered as sustainable and then determine how to flag them into its systems.

Responsible Investment Solutions

Responsible Investment Products

BIL is committed to develop its Responsible Investment (as per BIL's Sustainability Investment Framework) to clients with an interest in responsible investing.

BIL Luxembourg achieved a new milestone towards responsible investment practices by renewing its LuxFlag ESG Label accreditation for the BIL Invest Patrimonial, the BIL Invest Bonds EUR Corporate Investment Grade and the BIL Invest Equities Europe funds. Currently, six of BIL Invest's 17 in-house funds benefit from the LuxFlag ESG Label.

BIL Sustainability Investment Framework

In response to evolving ESG regulations, current market demand, and operational and data challenges, BIL established its Sustainability Investment Framework (SIF) in 2023, aligning with SFDR requirements. This framework aims to identify improvement areas to enhance compliance with regulatory guidelines when defining sustainable investments.

Markets in Financial Instruments Directive (MiFID)

In July 2024, BIL launched an updated version of its investor risk profile, which integrates the BIL sustainability questionnaire, replacing the previous separate questionnaire. This new approach enables automatic collection of clients' ESG preferences and classifies them into three sustainable profiles: neutral, moderate, or substantial.

BIL Green Bonds

In 2022, BIL was the first bank in Luxembourg to establish a Green Bond Framework dedicated to issuing green bonds. After a strong start with new issues in 2022, BIL Luxembourg has raised over EUR 500 million in Green Bonds since its launch by the end of 2024.

Markets and Customer Groups Served

BIL provides a broad range of services to meet the needs of its clients:

Retail Banking

Retail Banking serves the diverse retail and personal banking needs of both resident and non-resident individuals. BIL is represented in Luxembourg by a network of branches and advice centres located throughout the country.

Corporate & Institutional Banking (CIB)

CIB activities serve business owners, start-ups, small – medium – large companies, financial and non-financial institutions and public sector clients in Luxembourg and abroad.

Wealth Management

The Wealth Management business line provides financial and non-financial products and services to a wide range of clients, with a tailor-made approach.

Financial Markets

Financial Markets is primarily responsible for Balance Sheet Management which includes the Investment Portfolio, Treasury, Long-Term Funding and Asset and Liability Management (ALM).

BIL's Sustainability Strategy

BIL is committed to playing a strategic role in the transition to a sustainable world. BIL adheres to international sustainability frameworks, specifically committing to the United Nations Principles for Responsible Banking (UNPRB) and the United Nations Global Compact (UNGC).

In 2024, BIL established an ESG Charter that embodies BIL's dedication to sustainable banking practices that not only drive economic growth, but also contribute positively to society and the environment.

Specific goals include:

• Advance green and transition finance services: The Bank aspires to continue providing green and transition financing solutions that empower clients on their sustainability journeys.

• Integrate ESG factors across lending practices: The Bank aims to fully integrate Environmental, Social, and Governance (ESG) factors into its lending processes.

• Strengthen client engagement: The Bank aims to deepen its engagement with individual and corporate clients, providing tailored financing solutions and advisory services.

• Collect and analyse sustainability preferences: The Bank strives to establish a systematic approach to collecting and analysing clients' sustainability preferences.

• Enhance sustainable investment offerings: The Bank seeks to develop a comprehensive suite of sustainable investment products.

Value Creation

BIL actively engages with a diverse range of key stakeholders, which include clients (retail, wealth management, and corporate clients), employees of the BIL Group, suppliers, shareholders (notably Legend Holdings Corporation), non-profit organisations, governments and regulators, rating agencies and sustainability experts, supranational organizations focused on sustainability, and the Luxembourg Bankers' Association (ABBL).

Engagement with these stakeholders occurs regularly and is tailored to meet the specific needs of each group. For example, clients are engaged through relationship managers, branch offices, digital channels, and client satisfaction surveys. Employees provide feedback through regular feedback meetings, surveys like the Employee Net Promoter Score (E-NPS), and townhall meetings. Regulators and shareholders maintain open lines of communication regarding performance and expectations.

The organisation of this engagement is structured through various channels, ensuring that each stakeholder group has the opportunity to voice their opinions and concerns. This includes formal surveys, direct meetings, collaborative events, and ongoing communication through both digital and traditional platforms.

The outcomes of stakeholder engagement are systematically analysed and integrated into BIL's decision-making processes. Feedback received informs strategic adjustments and operational improvements, ensuring that the Bank remains responsive to its stakeholders. In response to stakeholder views, BIL has amended its strategy to develop sustainable financing solutions, enhance digital services, and improve employee health & well-being.

BIL incorporates the interests, views, and rights of its employees through inclusive policies, regular feedback mechanisms, and collaboration with unions and employee representatives. The Bank emphasises fair treatment, competitive remuneration, career development opportunities, and a healthy work environment, reflecting its values of caring and reliability. BIL integrates consumer interests and rights into its strategy by ensuring transparency in communications, providing access to financial education, and maintaining ethical banking practices.

The administrative, management, and supervisory bodies are regularly informed about stakeholder views and interests through specific and topic-related presentations done to the Executive Management (for e.g. client surveys, employee satisfaction, double materiality assessment, etc.).

BIL conducted a Double Materiality Assessment with the aim of identifying all material impacts, risks, and opportunities. The objective was two-fold: to confirm that the Bank's strategy and sustainability commitments are tackling issues that its stakeholders consider to be relevant and to identify any additional topics that are a priority for those stakeholders.

The assessment results were grouped and categorised into 12 material topics for clearer representation:

BIL's Material Impacts on the People and the Environment

Positive Impacts:

• Retail & Corporate Lending: By offering green loans to retail customers for energy-efficient home improvements, electric vehicles, and renewable energy installations, BIL supports the transition to a low-carbon economy. Similarly, the Bank's green loans to corporations for sustainable projects—such as renewable energy initiatives, green buildings, and sustainable supply chains—contribute to environmental sustainability and economic resilience.

• Investment Services: BIL provides investment solutions with an ESG focus, directing client funds towards projects and companies that support climate change mitigation and adaptation. This approach not only helps in reducing carbon footprints but also aligns investments with clients' sustainability preferences, ensuring that their financial goals are met in a responsible manner.

• Green Funding: Through the issuance of green bonds and other sustainable finance instruments, BIL directs funds towards projects that mitigate climate change and enhance resilience.

• Bank Portfolio Management: By allocating a portion of its own investment portfolio to sustainable investments, the Bank supports projects that promote climate resilience and reduce carbon emissions. Developing a sustainability-focused internal investment framework enhances long-term profitability by capitalising on the growing market for sustainable investments.

• Risk Management: Implementing climate risk management strategies reduces BIL's vulnerability to climate-related disruptions, ensuring the overall stability and resilience of the financial system. This proactive approach safeguards not only the Bank's assets but also those of its clients and stakeholders.

• Facilities Management: By adopting green building practices, the Bank enhances energy efficiency, reduces waste, and promotes a healthier environment—both for its employees and the communities in which it operates.

• Transparent Marketing and Communication: The Bank's effective marketing campaigns raise awareness about climate change and the importance of adaptation and mitigation efforts, encouraging customers to make environmentally friendly choices. By promoting sustainable practices, the Bank contributes to a broader cultural shift towards sustainability.

• Human Resources Practices: The Bank is committed to providing stable job opportunities, promoting diversity and inclusion, and upholding human rights practices. These initiatives contribute to employee development and satisfaction, while robust data protection measures safeguard employees' personal information and privacy.

• Client Centricity: Engaging in two-way communication with its clients allows the Bank to address their complaints and grievances effectively. This leads to better product and service offerings, enhancing client satisfaction and retention, and fostering long-term relationships built on trust.

• Compliance: Enforcing strict anti-corruption and anti-bribery policies maintains a fair and transparent working environment, while a strong anti-discrimination policy ensures equitable treatment of employees and clients.

Negative Impacts:

• Retail & Corporate Lending: Financing projects for high-emitting clients, thermal vehicles, or low energy-efficient houses contributes to financed GHG emissions, negatively impacting the environment.

• Bank Portfolio Management: Allocating investments into non-sustainable projects increases the Bank's financed emissions, undermining its sustainability goals.

• Facilities Management: The Bank's own operations, including buildings and travel, contribute to GHG emissions.

• Compliance: Extensive data collection can lead to privacy violations and misuse of personal information.

• IT: Increased reliance on digital platforms exposes the Bank and its customers to cyber threats and data breaches.

• Client Centricity: Absence of two-way engagement with clients can result in difficulty retaining them.

• HR Practices: Violating human rights can lead to dissatisfied workers, impacting employee satisfaction and retention.

The impacts vary in their time horizons. Actual impacts, such as those from current lending practices and investment services, are immediate. Potential impacts, like those from future green building practices and sustainability-focused investment frameworks, are expected to materialise over the medium to long term. The Bank's ongoing efforts in climate risk management and employee development also have long-term implications for stability and resilience.

The Bank is involved with these impacts through its direct activities and business relationships. For instance, retail and corporate lending directly influences financed emissions and the promotion of green projects. Investment services and green funding are connected to the Bank's strategy of directing client funds towards sustainable initiatives. The Bank's internal operations, such as facilities management and HR practices, also contribute to its overall environmental and social footprint. Additionally, the Bank's relationships with clients and stakeholders, including through client engagement and compliance policies, play a crucial role in shaping these impacts.

Interaction with Strategy and Business Model

The Bank recognises the increasing demand for sustainable client solutions, which impacts its service offerings and necessitates a shift in strategy to assist clients in transitioning to more sustainable practices. This commitment aligns with the Bank's dedication to conducting business responsibly while strategically growing to support the global economy. As part of this commitment, the Bank is enhancing its sustainability initiatives throughout its value chain to reduce the environmental impact of its operations. The demand for innovative and sustainable banking products shapes the Bank's product development strategy, driving efforts to create tailored solutions that meet client needs and align with sustainability goals.

The Bank actively integrates diversity and inclusion into all relevant operations, ensuring that its hiring practices and internal culture reflect these values. Additionally, the Bank is focusing on employee engagement, thus promoting a culture of caring, empathy, and open-mindedness.

In light of growing cybersecurity risks, the Bank acknowledges the need for robust data protection measures, influencing its decision-making regarding technology investments and data governance to safeguard user safety and privacy. To address this, the Bank is prioritising investments in cybersecurity infrastructure and employee training, ensuring that it is well-equipped to protect client data.

Moreover, the Bank is dedicated to upholding human rights across its employees, supply chain, and clients. In this context, the Bank is enhancing its engagement with suppliers to ensure they adhere to the same standards of human rights and ethical practices.

Fostering the skills and competencies of its employees is also a priority, enabling the workforce to better serve clientele and adapt to evolving market demands. The Bank is investing in employee development programs and training to enhance the capabilities of its team.

Resilience of BIL's Strategy and Business Model

BIL employs quarterly scenario analyses that assess various risks defined in the Bank Risk Taxonomy. These analyses not only help gauge the Bank's situation under potential future scenarios but also establish a basis for an additional Economic Capital Assessment (ECAP) buffer linked to ESG features. By closely monitoring these impacts, BIL aims to ensure resilience in its financial position, performance, and cash flows.

No material risk or opportunity presents a significant risk of a material adjustment within the next annual reporting period to the carrying amounts of assets and liabilities reported in the related financial statements.

Under European Central Bank (ECB) Supervisory expectations relating to business models and strategy, regulatory expectations were addressed through the identification and assessment of material risks: building a robust risk management framework, using scenario analysis and stress testing, strengthening risk corporate governance to ensure board-level oversight of climate risks and compliance with evolving regulations.

• BIL annually conducts its Global Risk Cartography, integrating an ESG risk mapping exercise, with the objective of identifying the transmission channels for climate-related risk drivers, social and governance risk drivers on financial and non-financial risks, considering a medium and long-term horizon.

• BIL applies ESG stress testing scenarios to identify potential weaknesses in its exposure across different activity sectors, challenges the business strategy and provides quarterly a high-level view of the impacts of ESG drivers on credit, market, liquidity and non-financial risks to the Bank's Management bodies.

• Since 2023, BIL developed an ESG Dashboard to monitor the impact of climate change and environmental degradation, providing a global overview on the Lending portfolio, Bank Investment Portfolio, Client Investment Portfolio, its carbon footprint and its climate targets.

• In the context of the Bank's Risk Appetite Framework (RAF), BIL classifies its loan book exposures according to SASB criteria, taking into account ESG features, with a focus on those subject to Biodiversity Risk and losses. These assessments are included in the Global Risk Dashboard and presented quarterly to the Management.

In September 2024, the Board of Directors approved new indicators and limits related to Transition and Physical risks for the Residential and Commercial Real Estate Portfolio as part of the Risk Appetite Statement. These indicators will help monitor and manage risks associated with energy performance and collateral classifications, ensuring alignment with environmental standards. Additionally, in December 2024, new ESG risk indicators were validated, focusing on exposure to ESG bonds, concentration in top emitting sectors, and the impact of ESG factors on non-financial risks.

The Bank regularly focuses on technological innovations and maintaining an agile business model in order to quickly respond to market and regulatory changes while taking advantage of identified opportunities.

The Double Materiality Assessment with the aim of identifying all material impacts, risks, and opportunities. As part of the financial materiality exercise, BIL evaluated how sustainability issues affect the Bank's financial performance and value, including risks and opportunities related to ESG topics. BIL considered the ESG risk scenarios developed as part of BIL's Risk Cartography exercise as well as ESG opportunities for the Bank.

The assessment was structured around impact materiality and financial materiality exercises:

Impact Materiality Assessment

For the impact materiality assessment, a questionnaire was prepared and sent to diverse stakeholders including employees from Management, Risk, Operations, HR, Legal, Procurement, IT, Sustainable Development, Investment and Strategy departments. The employees from BIL's subsidiaries also took part in assessing the impact materiality of topics. The questionnaire consisted of a list of 23 pre-defined ESG topics along with multiple examples of positive and negative impacts arising from BIL's own-activities or as a result of its business relationships (upstream or downstream value chain). Each stakeholder gave a score on every ESG topic based on Scale, Scope, Irremediability (for negative impacts only) and Likelihood on a range from 1 to 4. The scores given on the 4 axes (Scale, Scope, Irremediability, Likelihood) were added to give a consolidated score for each topic in a range from 4 to 16 for positive impacts and 5 to 20 for negative impacts.

Financial Materiality Assessment

For the financial materiality assessment, the questionnaire was sent to stakeholders from departments that are most likely to be impacted by sustainability topics. These included Management, Risk, Strategy, Investment, Sustainable Development and Operations. In the questionnaire, the stakeholders were asked to give a score to different ESG risks and opportunities on a Scale ranging from 1 to 4 (from low to very high) and a score on Likelihood ranging from 1 to 4 (from very unlikely to very likely). Then for each topic, a consolidated score was calculated by multiplying the average Score and the average Likelihood, resulting in a range from 1 to 16.

Materiality Assessment Results

A consolidated materiality matrix was prepared based on the results of both exercises. The final selection of material topics considered both the quantitative results of the survey and the qualitative inputs from stakeholders discussions. The materiality thresholds for impact and financial materiality were established through an iterative process that took into account the opinion of the Bank's senior management and involved reviewing the distribution of scores to identify natural cut-off points and significant gaps in the scoring. Different thresholds were tested to ensure that the final selection of material topics was representative, balanced and actionable.

The assessment results were grouped and categorised into 12 material topics. The methodology ensured a comprehensive evaluation that considered both quantitative and qualitative factors, incorporating diverse stakeholder perspectives and aligning with regulatory expectations.

Transition plan for climate change mitigation

Compatibility with limiting global warming to 1.5°C

The Bank is committed to achieving net-zero greenhouse gas (GHG) emissions by 2050 for its own operations and its lending portfolio.

This ambition aligns with the global goal of limiting warming to 1.5°C, and BIL Group is actively working on developing comprehensive targets across all areas of its activities to ensure it meets this critical objective.

BIL Group has pinpointed three critical areas to focus on in its journey towards decarbonisation:

• Lending portfolio: targeting Corporates & SMEs and Residential Real Estate, as these sectors contribute the most to financed emissions and risks
• Own operations: aiming to lead by example by acting on its own operational practices, even if the associated risks and impacts are minimal compared with the portfolios mentioned above

For its business loans, BIL Group aligned its targets with the International Energy Agency (IEA) guidelines. The IEA provides sector-specific pathways and benchmarks for reducing GHG emissions.

BIL's objectives for residential real estate are aligned with the "Plan National Intégré en Matière d'Énergie et de Climat" (PNEC) of Luxembourg, outlining the country's strategy for achieving its energy and climate goals for 2021-2030. Additionally, BIL is committed to adhering to the Carbon Risk Real Estate Monitor (CRREM) pathway, viewing it as a global benchmark scenario.

For its own operations, BIL Group aligned its targets with the Science Based Targets initiative (SBTi). While the targets are not SBTi-validated, the Bank used SBTi's robust framework for setting GHG emission reduction targets that are in line with climate science.

Scope of the plan

The Transition Plan outlines specific measures to reduce GHG emissions, focusing on the scope of decarbonising both credit portfolios and the Bank's operational footprint. The Transition Plan was developed with the assistance of external consultants and discussed with the relevant internal stakeholders, primarily from Retail Banking, Corporate Banking, and Corporate Real Estate. It is based on international references and guidelines.

The scope covers:

• BIL's Residential Real Estate Portfolio
• BIL's Corporate Lending Portfolio (Corporates & SMEs)
• BIL's own Operational Carbon Footprint

Entities covered: BIL Luxembourg, BIL Lease, BIL Switzerland (headquarters, branches and offices).

Target year(s) for net zero / carbon neutral

Net zero by 2050 for own operations and lending portfolio.

Interim targets set for 2030.

Scope 1, 2, 3 reduction milestones with baseline years

Baseline year: 2022

GHG reduction targets:

100% of GHG reduction targets in absolute terms pertain to GHG Scope 1 and Scope 2, calculated on a location-based approach. The scope of the targets is limited to the operational activities of BIL Luxembourg and BIL Switzerland and the lending portfolio of the Bank.

No targets have been set for Scope 3 operational emissions and for 2050.

These GHG emission reduction targets are gross targets, meaning that the Bank has not included GHG removals, carbon credits or avoided emissions as a means of achieving the GHG emission reduction targets.

Alignment with 1.5°C / SBTi validation status

BIL's Transition Plan focuses on alignment with the Paris Agreement and limiting warming to 1.5°C.

Own operations: Aligned with Science Based Targets initiative (SBTi) trajectories. The targets are not SBTi-validated, but the Bank used SBTi's robust framework for setting GHG emission reduction targets that are in line with climate science.

Corporate lending: Aligned with International Energy Agency (IEA) guidelines and IEA's Net Zero 2050 scenario (IEA NZE 2050).

Residential real estate: Aligned with Luxembourg's "Plan National Intégré en Matière d'Énergie et de Climat" (PNEC) and committed to the Carbon Risk Real Estate Monitor (CRREM) pathway.

BIL is committed to the Principles for Responsible Banking, ensuring that its transition efforts align with global best practices. By aligning its GHG reduction targets with established frameworks (such as SBTi, IEA and CRREM), BIL ensures that its overall ambition to achieve net-zero emissions by 2050 is scientifically grounded and contributes effectively to the global effort to limit warming to 1.5°C.

Key levers / decarbonization pillars

Lending Portfolio - Corporates & SMEs:

Client engagement is the key lever for decarbonising business loans. This involves working closely with clients, especially those with higher CO2 emissions, to assess, encourage and support their transition to more carbon-efficient business practices and investments.

The target is to engage with clients who collectively represent at least 40% of GHG emissions in Business Loans by end of 2025 (> 60% by end of 2026). This approach will allow BIL to evaluate the existence and maturity of their climate Transition Plan and decarbonisation targets.

Lending Portfolio - Residential Real Estate:

Three levers have been identified to decarbonise this portfolio:

• Financing new acquisitions with improved energy performance
• Financing renovation
• Financing renewable energy

All three levers need to be activated to achieve the targets set. However, an essential external factor is the leverage effect of national efforts, including government initiatives, regulations, and aid schemes, without which the banks cannot achieve their objectives alone.

Own operations:

Two primary levers identified:

• The electrification of employee leasing with a decrease by 51% of the linked GHG emissions by 2030
• The implementation of energy efficiency measures in the buildings with a decrease by 16% of the linked emissions by 2030

In line with the Bank's commitment to the Science-Based Targets Initiative (SBTi) trajectories for scopes 1 and 2, BIL has developed a Transition Plan that aims for the complete electrification of its employee leasing fleet by 2030. Recognising that buildings contribute significantly to its operational emissions, the Bank will develop a comprehensive buildings' strategy.

Supporting actions across the lending portfolio:

• Product and service portfolio: expanding the green financing range of products and services offered for corporate and individual clients
• Green financing framework: to be defined by ensuring alignment with LMA Green Loan Principles, Taxonomy requirement, and other adequate frameworks
• Risk management: enhancing ESG integration into risk management, including credit risk appetite, credit granting (including exclusion policy), pricing policy and stress testing
• Awareness and training: providing training and raising awareness among employees and stakeholders about the importance of decarbonisation and energy efficiency
• Data collection: improving ESG data collection, storage and exploitation

CapEx / investment commitments

Not specifically disclosed in quantitative terms.

Actions mentioned include:

• Installation of photovoltaic panels on the roof of headquarters (completed 2024)
• Replacement of control system and temperature sensors across the building
• Gradual transformation of lighting to LED at headquarters
• Improvement of building management system (BMS) for optimised parking lighting
• Updated transmission systems of all ventilation units
• Installation of a geothermal heat pump

Locked-in emissions and stranded asset analysis

Due to locked-in emissions from buildings, the Bank currently anticipates a reduction of only 35% in scopes 1 and 2 by 2030 (compared to the SBTi pathway of -42%). The strategy of the building is not yet defined in the Transition Plan and the need for this strategy has been validated by the ExCo and the Board.

The targets on operational emissions of BIL do not include factors such as acquisition or divestments of its buildings.

Use of carbon credits / removals

These GHG emission reduction targets are gross targets, meaning that the Bank has not included GHG removals, carbon credits or avoided emissions as a means of achieving the GHG emission reduction targets.

Governance and approval

The Group Head of Sustainable Development is responsible for the implementation of the Transition Plan, reporting directly to the Executive Committee to ensure alignment with corporate strategy.

In 2024, BIL's Transition Plan was reviewed and approved in a dedicated meeting with the ExCo and the Board of Directors, outlining how the Bank assesses and mitigates the risks its clients may encounter due to climate change while also highlighting the opportunities for clients to invest in their own transitions. A set of metrics, targets, and strategies has been established for three key areas: BIL's Residential Real Estate Portfolio, BIL's Corporate Lending Portfolio, and its own Operational Carbon Footprint.

Throughout 2024, BIL has been working on defining its Transition Plan, which was approved by the Executive Committee and then the Board of Directors in October 2024, taking effect in 2025.

The Transition Plan is integrated into the Bank's overall business strategy and financial planning. This ensures that the ambition to achieve Net Zero by 2050 is supported by the Bank's long-term goals and operational decisions.

Progress monitoring

A Transition Plan monitoring will be integrated into the Bank's ESG Dashboard. BIL will continue to calculate its annual carbon footprint, covering both operational and financed emissions, and assess the alignment of its credit and investment portfolios with the IEA's NZE 2050 scenario. The Bank will also report annually on its net-zero progress, including updates on interim targets and key milestones.

Exclusions

BIL Group is not excluded from the EU Paris-aligned Benchmarks as per Article 10 of the Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020.

Stakeholder engagement

Engagement with stakeholders, including employees and the community, will be a key component of the Bank's approach, ensuring transparency and collaboration in its sustainability initiatives.

Policies related to climate change mitigation and adaptation

BIL has established several policies to address the identification, assessment, management, and remediation of material climate change mitigation and adaptation impacts, risks, and opportunities.

BIL ESG Charter

Policy name: BIL ESG Charter

Key content/principles:

• Outlines the Bank's commitment to sustainable banking practices by integrating Environmental, Social, and Governance (ESG) principles into its operations, strategies, and governance framework
• Ensures that sustainability considerations are embedded in decision-making processes
• Main processes impacted by ESG integration at BIL encompass risk management, lending and investment decisions, product development, procurement, human resources, environmental impact management, and human rights considerations

Scope:

• Encompasses all entities of the BIL Group

Governance/Oversight:

• Implemented through the ESG programme, overseen by a member of BIL's Executive Committee

Public availability:

• Accessible to all internal stakeholders via the internal website
• Available to external stakeholders on the Bank's website

BIL's Transition Plan

Policy name: BIL's Transition Plan

Key content/principles:

• Designed to mitigate climate change impacts and enhance resilience through targeted strategies
• Outlines BIL's commitment to reducing greenhouse gas (GHG) emissions in alignment with the Paris Agreement
• Ensures that the Bank's business model remains relevant in a transitioning economy toward Net Zero, thereby mitigating potential transition risks
• Outlines specific measures to reduce GHG emissions, focusing on decarbonising both credit portfolios and the Bank's operational footprint
• Focuses on three critical areas: lending portfolios targeting Corporates, SMEs, and Real Estate (significant contributors to financed emissions and associated risks), and BIL's own operations

Scope:

• Covers BIL's lending portfolio (corporates, SMEs, residential real estate) and own operations

Governance/Oversight:

• Group Head of Sustainable Development is responsible for implementation, reporting directly to the Executive Committee
• Approved by the Executive Committee and Board of Directors in October 2024, taking effect in 2025

Alignment with international standards:

• Committed to the Principles for Responsible Banking
• GHG reduction targets aligned with established frameworks (SBTi, IEA and CRREM)
• Overall ambition to achieve net-zero emissions by 2050 is scientifically grounded and contributes to the global effort to limit warming to 1.5°C

Monitoring:

• Transition Plan monitoring integrated into the Bank's ESG Dashboard
• Annual carbon footprint calculation covering operational and financed emissions
• Assessment of alignment of credit and investment portfolios with the IEA's NZE 2050 scenario
• Annual reporting on net-zero progress, including updates on interim targets and key milestones

Risk Identification and Assessment Policy

Policy name: Risk Identification and Assessment Policy

Key content/principles:

• Provides main principles, methodological and process steps for the performance of the Risk Identification and Assessment Process at BIL Group as part of its Risk Management Framework
• Includes the capture of ESG risks through a separate set of ESG scenarios as part of the self-assessment
• Material risks linked to climate are categorised as transition or physical risks

Scope:

• BIL Group

Governance/Oversight:

• Chief Risk Officer is responsible for implementation
• Reviewed on an annual basis

Principal Adverse Impact (PAI) Statement

Policy name: Principal Adverse Impact (PAI) Statement

Key content/principles:

• Describes how the Bank considers the PAI of its investment decisions on sustainability factors
• Summarises the Bank's investment due diligence policies in respect of the associated processes

Governance/Oversight:

• Chief Investment Officer is responsible for the statement
• ESG Officer has a central role in overseeing BIL's responsible investment processes and reporting to the Chief Investment Officer
• Responsibilities include carrying out ex-post control procedures on the ESG characteristics of securities/funds, monitoring portfolio/fund exposure to PAI, supporting product development and portfolio management efforts on sustainable investment solutions

Public availability:

• Available on BIL's website

Responsible Investment Policy

Policy name: Responsible Investment Policy

Key content/principles:

• Addresses the responsible investment process for all in-house products classified as Article 8 per SFDR and discretionary mandates at BIL Luxembourg
• Involves considering environmental, social, and governance (ESG) issues when making investment decisions
• Covers several types of responsible investment processes, from exclusions screening to ESG integration
• Describes the monitoring performed to secure BIL's responsible investment commitments
• Follows BIL's applicable Sustainability Risk Policy

Governance/Oversight:

• Managed by the Chief Investment Officer

Sustainability Risk Policy

Policy name: Sustainability Risk Policy

Key content/principles:

• Addresses sustainability risk within the investment process and advisory services through a comprehensive approach
• Applies a risk/return assessment during the security selection process for discretionary portfolio management and in-house BIL Invest funds
• In advisory services, advisors rely on BIL's carefully selected investment universe, which undergoes selection processes enabling advisors to provide clients with information about potential sustainability risks

Governance/Oversight:

• Chief Investment Officer is responsible for implementation

Public availability:

• Available on BIL's website

Investment Portfolio Guidelines Charter

Policy name: Investment Portfolio Guidelines Charter

Key content/principles:

• Defines the guidelines of the Investment Portfolio for BIL
• With respect to ESG matters, BIL invests in companies and sovereigns that respect ESG principles
• Bank's investment approach is carefully aligned with its exclusion policy and the Sustainable Investment Framework

Scope:

• Covers the activities of BIL Luxembourg and BIL Switzerland
• Solely targets the Bank's own investment portfolio actions

Governance/Oversight:

• Responsibility of BIL's Balance Sheet Management department
• Validated by the Head of Strategy, SGO & Balance Sheet management

Green Bond Framework

Policy name: Green Bond Framework

Key content/principles:

• Supports the growth of the sustainable finance market
• Ensures meeting commitments of the Paris Agreement on global climate action
• Addresses investors' willingness to finance sustainable activities

Global Risk Charter and Credit Risk Appetite Framework

Policy name: Global Risk Charter and Credit Risk Appetite Framework

Key content/principles:

• Outlines how the credit risk appetite integrates ESG factors
• Includes sector limits informed by the SASB Materiality Map, which identifies material sustainability issues for various industries
• Facilitates the monitoring of ESG exposure and its impact on borrowers' creditworthiness
• Applies to all new credit transactions involving Corporate and MidCorp counterparties, focusing on sectors identified as having high, medium, or low ESG risks

Scope:

• Covers BIL Luxembourg, BIL Lease and BIL Switzerland

Governance/Oversight:

• Responsibility of the Chief Risk Officer
• Reviewed on a regular basis

Monitoring:

• Monitoring applies to all new credit transactions involving Corporate and MidCorp counterparties

Stress Testing Charter

Policy name: Stress Testing Charter

Key content/principles:

• Describes the use of Climate Risk scenarios to test the resilience of the Bank to the physical and transition risks associated with different possible climate scenarios

Scope:

• Covers BIL Luxembourg, Belair House, BIL Lease, BIL Manage Invest and BIL Switzerland

Governance/Oversight:

• Implemented by the Chief Risk Officer

Loan Pricing Charter and Policy

Policy name: Loan Pricing Charter and Policy

Key content/principles:

• Establishes guiding principles for developing the Bank's Loan Pricing Framework at the Group level
• Framework aligns with BIL's business strategies and risk appetite, incorporating profitability, risk perspectives, and ESG risks
• Ensures transparent and equitable loan pricing practices

Governance/Oversight:

• Managed by the Chief Risk Officer and the Head of Product Governance and Pricing
• Policy approved by the Executive Committee
• Charter approved by the Board of Directors

Sustainability Investment Framework (SIF)

Policy name: Sustainability Investment Framework (SIF)

Key content/principles:

• Aims to establish a consistent and comprehensive methodology for categorising financial instruments within two distinct categories: sustainable and non-sustainable
• Carefully outlines the definition, criteria, and indicators to enhance clarity and transparency of the categorisation process
• Applicable to the client investment universe (setting out criteria for classifying financial instruments as sustainable for MiFID II purposes) and the Bank's investment portfolio
• Established in 2023, aligning with SFDR requirements, in response to evolving ESG regulations, current market demand, and operational and data challenges

Governance/Oversight:

• The Investment Value Chain, led by the Head of Investment Product Management, is the owner and responsible for the definition and implementation
• Reviewed at least once a year
• Results of the review presented to the ESG Strategic Steering Committee

Monitoring:

• Ensures alignment with the Sustainability Risk Policy and with the Bank's ESG Strategy

Actions and resources in relation to climate change policies

Green and Transition Finance Services

Action: Advance green and transition finance services

• Description: Providing green and transition financing solutions that empower clients on their sustainability journeys
• Scope: Downstream value chain (client financing)
• Products offered:
  • Green and transition loans: mortgages, personal loans, and investment loans for renewable energy projects and energy-efficient renovations
  • Sustainable investment products: green bonds and sustainable investment funds
• Planned targets: Establish specific targets for green mortgages, renovations, and renewable energy projects within the Transition Plan; identify future opportunities for corporate loans
• Outcomes (2024):
  • EUR 5.7 million of green car financing
  • 185 renewable energy loans amounting to EUR 4,247,200
  • 30 green renovation loans amounting to EUR 505,902
  • EUR 519.3 million outstanding of green bonds issued

Action: Sustainable Investment Products

• Description: Investment options enabling clients to contribute to sustainable economy transition
• Scope: Downstream value chain
• Outcomes:
  • 28% SIF-compliant assets under Discretionary Portfolio Mandates
  • 22% SIF-compliant assets under Advisory Mandates
  • 26.89% ESG share in Bank portfolio

ESG Integration in Lending

Action: Integrate ESG factors across lending practices

• Description: Full integration of Environmental, Social, and Governance (ESG) factors into lending processes
• Scope: Own operations and downstream value chain
• Key elements:
  • Ensure all mortgage decisions account for physical and transition risks
  • Evaluate corporate clients' exposure to ESG risks
  • Support clients' sustainability journeys effectively
• Policy link: Linked to Lending policies, Global Risk Charter, and Credit Risk Appetite Framework

Client Engagement and Support

Action: Strengthen client engagement

• Description: Deepen engagement with individual and corporate clients, providing tailored financing solutions and advisory services
• Scope: Downstream value chain
• Approach: Work closely with high-emitting clients to collaboratively evaluate and enhance their transition plans
• Tool: Climate Transition Maturity Assessment tool
  • Developed respecting Carbon Disclosure Project criteria
  • Implemented in Q3 2024
  • Initial pilot in Q4 2024 with two Corporate department teams
  • 2 customers assessed by end of 2024

Action: Collect and analyse sustainability preferences

• Description: Establish systematic approach to collecting and analysing clients' sustainability preferences
• Scope: Downstream value chain
• Objective: Provide informed and relevant advice on sustainable investments

Action: Enhance sustainable investment offerings

• Description: Develop comprehensive suite of sustainable investment products
• Scope: Downstream value chain
• Approach: Integrate ESG factors into all investment processes, enhance risk management framework

Operational Decarbonisation

Action: Energy efficiency improvements in buildings

• Description: Multiple energy efficiency measures in own operations
• Scope: Own operations
• Time horizon: Ongoing through 2030
• Specific measures:
  • Replacement of 100,000 LED lights
  • Installation of remote-controlled building management system (BMS) for optimised parking lighting with presence detection
  • Updated transmission systems for all ventilation units (replacing pulleys and belts)
  • Energy management: heating at 21°C, cooling at 26°C, optimised outdoor lighting
  • Installation of geothermal heat pump with cooling tower water as heat source for hot water needs (work in progress)
• Expected outcome: 16% reduction in emissions by 2030
• Link to target: Contributes to operational GHG Scope 1 and 2 reduction targets

Action: Electrification of employee leasing fleet

• Description: Transition employee leasing vehicles to electric
• Scope: Own operations (Scope 3 Category 15)
• Time horizon: Through 2030
• Expected outcome: 51% reduction in linked GHG emissions by 2030
• Current status (2024): 42% share of electric vehicles in BIL's leasing fleet
• Link to target: Contributes to operational emissions reduction

Green Bond Framework

Action: Green Bond issuance

• Description: Support growth of sustainable finance market through Green Bond Framework
• Scope: Own operations (funding)
• Time horizon: Since inception through 2024
• Resources raised: Over EUR 500 million equivalent as of end-2024 (primarily private placements since 2022)
• Objective: Meet Paris Agreement commitments and address investor demand for sustainable activities
• Link to policy: Green Bond Framework

Digitalisation Initiatives

Action: BIL Lease partial digitalisation of contractual documentation

• Description: Digitalise contractual documentation to reduce environmental impact
• Scope: Own operations (BIL Lease entity)
• Time horizon: Launched September 2024
• Expected outcome: Save approximately 20,000 sheets of paper annually
• Related activities:
  • Financing electric buses of RGTR in Luxembourg
  • Incentives for electric vehicle leasing (60 basis points discount on standard interest rates)

BIL Switzerland-Specific Initiatives

Action: Bike to Work Challenge

• Description: Employee participation in sustainable commuting initiative
• Scope: Own operations (BIL Switzerland)
• Time horizon: June 2024
• Objective: Promote eco-friendly commuting, reduce carbon footprint, enhance employee well-being

Action: Public transport contribution

• Description: Offering Lugano and Geneva employees Bonuspass at reduced rate
• Scope: Own operations (BIL Switzerland)
• Objective: Promote use of public transportation for commuting

Awareness and Training

Action: ESG training program

• Description: Mandatory ESG training for all staff
• Scope: Own operations
• Time horizon: Launched 2024
• Resources: Non-financial (28.35 average training hours per employee across all topics)
• Objective: Ensure every employee equipped to contribute to sustainability goals

Action: Climate awareness initiatives

• Description: Multiple awareness-raising activities
• Scope: Own operations
• Activities:
  • MyCO2 workshops for individual carbon footprint awareness
  • Climate fresks for climate change understanding
  • Sustainability week
  • Training for Corporate department relationship managers (4 sessions in 2024) on climate change adaptation and mitigation

Risk Management Integration

Action: ESG integration into Risk Management Framework

• Description: Progressive implementation of risk approaches supporting ESG matters
• Scope: Own operations
• Components:
  • Initial indicators integrated into Risk Appetite Framework
  • ESG factors included in annual Risk Cartography
  • Risk Identification and Assessment Policy includes ESG scenarios
  • Quarterly ESG stress test scenarios
• Governance: Chief Risk Officer responsible for implementation
• Link to policy: Global Risk Charter, Credit Risk Appetite Framework, Risk Identification and Assessment Policy

Investment Due Diligence

Action: Principal Adverse Impact (PAI) statement implementation

• Description: Consider PAI of investment decisions on sustainability factors
• Scope: Own operations (investment portfolio)
• Governance: Chief Investment Officer responsible; ESG Officer oversees responsible investment processes
• Activities:
  • Ex-post control procedures on ESG characteristics of securities/funds
  • Monitoring portfolio/fund exposure to PAI
  • Support product development on sustainable investment solutions
• Link to policy: Responsible Investment Policy, PAI Statement (available on website)

Targets related to climate change mitigation and adaptation

BIL is committed to achieving net-zero greenhouse gas (GHG) emissions by 2050 for its own operations and its lending portfolio and has established specific GHG reduction targets for its own operations and its lending portfolio starting with several high-emitting sectors.

GHG Reduction Targets Summary Table

Target scope and characteristics:

• 100% of GHG reduction targets in absolute terms pertain to GHG Scope 1 and Scope 2, calculated on a location-based approach
• Scope limited to operational activities of BIL Luxembourg and BIL Switzerland and the lending portfolio of the Bank
• Absolute/intensity: Scope 1 and 2 targets are absolute; lending portfolio targets are intensity-based
• Science-based alignment: Targets aligned with SBTi trajectories for scopes 1 and 2 (not SBTi-validated); lending portfolio aligned with IEA's Net Zero 2050 scenario and PNEC Luxembourg for residential real estate
• Greenhouse gases covered: CO2, CH4, N2O, Fluorinated hydrocarbons (HFCs, PFCs, SF6, CFCs, HCFCs), Non-Kyoto/Paris-protocol: Ozone (O3), Water (H2O)
• Gross targets: No GHG removals, carbon credits or avoided emissions included

Own Operations Targets (Scope 1 & 2)

Scope 1:

• 2022 baseline value: 2,096 tCO2e
• 2030 target: 572 tCO2e
• Reduction: 73% reduction from baseline

Scope 2 (location-based):

• 2022 baseline value: 2,737 tCO2e
• 2030 target: 2,573 tCO2e
• Reduction: 6% reduction from baseline

Emission scope: Scopes 1 and 2

Geographic scope: BIL Luxembourg and BIL Switzerland

Decarbonisation levers:

• Electrification of employee leasing fleet with 51% decrease in linked GHG emissions by 2030
• Implementation of energy efficiency measures in buildings with 16% decrease in linked emissions by 2030

Alignment: Aligned with SBTi trajectories for financial institutions (not SBTi-validated); based on cross-sector absolute reductions pathway with 42% reduction target, though Bank anticipates 35% reduction due to locked-in emissions from buildings

Lending Portfolio Targets - Corporates & SMEs

Power Generation

• Target metric: Power Generation [tCO2 / MWh]
• 2022 Baseline value: Index 24.57
• 2030 Target: Index 40.44
• Reference scenario: IEA's Net Zero 2050 scenario (IEA NZE 2050) - Electricity generation
• Emission scope: Scope 1
• Sector coverage (NACE code): 35.11 Production of electricity
• Type: Intensity-based

Aluminium Production

• Target metric: Aluminium Production [tCO2/ ton of product]
• 2022 Baseline value: Index 102.24
• 2030 Target: Index 52.13
• Reference scenario: IEA's Net Zero 2050 scenario (IEA NZE 2050) - Non-ferrous metals: aluminium
• Emission scope: Scope 1 and 2
• Sector coverage (NACE code): 24.42 Aluminium production
• Type: Intensity-based

Iron & Steel Production

• Target metric: Iron & Steel Production [tCO2/ ton of product]
• 2022 Baseline value: Index 107.65
• 2030 Target: Index 72.76
• Reference scenario: IEA's Net Zero 2050 scenario (IEA NZE 2050) - Iron and steel
• Emission scope: Scope 1 and 2
• Sector coverage (NACE code): 24.1 Manufacture of basic iron and steel and of ferro-alloys
• Type: Intensity-based

Key decarbonisation lever: Client engagement - target to engage with clients representing at least 40% of GHG emissions in Business Loans by end of 2025 (>60% by end of 2026)

Lending Portfolio Targets - National Residential Real Estate

• Target metric: Residential Real Estate [tCO2/ m2]
• 2022 Baseline value: Index 100
• 2030 Target: Index 56
• Reduction: 44% reduction from 2022 until 2030
• Reference scenario: Aligned with Luxembourg's PNEC WAM scenario; also monitoring CRREM pathway (57% reduction 2022-2030) as global reference
• Type: Intensity-based
• Geographic scope: Luxembourg residential real estate portfolio

Decarbonisation levers:

• Financing new acquisitions with improved energy performance
• Financing renovation
• Financing renewable energy
• External factor: leverage effect of national efforts (government initiatives, regulations, aid schemes)

2050 Net-Zero Commitment

• Long-term ambition: Net-zero GHG emissions by 2050 for own operations and lending portfolio
• Alignment: Commitment aligns with global goal of limiting warming to 1.5°C
• Approval: Transition Plan approved by Executive Committee and Board of Directors in October 2024, taking effect in 2025

Additional Information

• No targets set for Scope 3 operational emissions
• No targets set for 2050 (interim targets only)
• No GHG reduction target in absolute value set for Corporates & SMEs portfolio at this stage
• BIL is not excluded from EU Paris-aligned Benchmarks as per Article 10 of Commission Delegated Regulation (EU) 2020/1818
• Targets monitored through annual carbon footprint calculation and Transition Plan
• Progress reporting integrated into Bank's ESG Dashboard with annual updates on net-zero progress

Energy consumption and mix

BIL reports energy consumption for its operations, covering BIL Group entities. The following table presents the energy consumption and mix for 2024:

Scope: BIL Group

Methodology note: The Bank's main building operates 100% on renewable electric energy. In early 2025, part of the building's electricity will be generated by photovoltaic panels installed on the roof during 2024.

Gross Scopes 1, 2, 3 and Total GHG emissions

Total carbon footprint

The table below presents the total gross greenhouse gas emissions calculated for BIL Group, represented in tons of CO2 equivalent.

GHG intensity per net revenue

Net revenues as per Annual Report 2024 Primary Financial Statements

Methodology and scope

BIL followed the GHG Protocol and its methodology to calculate the operational carbon footprint. The organisational perimeter includes the Headquarters, Luxembourgish subsidiaries (Belair House, BIL Manage Invest and BIL Lease), branches, and offices in Switzerland (Zurich, Geneva and Lugano). Representative offices in China are not considered material.

Greenhouse gases considered: Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O), Fluorinated hydrocarbons (HFCs, PFCs, SF6, CFCs, HCFCs), Non-Kyoto/Paris-protocol: Ozone (O3), Water (H2O).

Scope 1 includes emissions directly produced on site: heating needs (gas consumption and heating oil), losses of refrigerant gases from cooling systems, company and leasing cars.

Scope 2 relates to electricity consumption and emissions occurring on the site of BIL's electricity provider (indirect).

Scope 3 emissions are indirect emissions occurring in the value chain and account for the majority of BIL's carbon footprint. Category 15 (Investments) represents financed emissions from lending and investment activities.

Recalculation of 2022 and 2023 data

The implementation of a new calculation tool required recalculation of 2022 and 2023 data. Methodology adjustments considered elements such as the life cycle of company cars or leases and total services billed over the year in euros.

BIL's financed emissions

Banks have an impact on the climate through financed emissions from lending and investment activities, which account for more than 99% of BIL's total carbon footprint. The calculation method is based on the GHG Protocol of the Partnership for Carbon Accounting Financials (PCAF).

BIL has assessed 77% of the Group's total balance sheet covering EUR 23.7 billion of outstanding loans and investments. The calculation included 95% of this exposure for scope 1 and 2 financed emissions and 55% for scope 3.

Total financed emissions as of 31 December 2024 were estimated to be 4,105,938 tCO2e: 1,852,310 tCO2e for scope 1 and 2 financed emissions and 2,253,628 tCO2e for scope 3 emissions.

Data quality

According to the PCAF standard, financed emissions are obtained by multiplying the emissions of the investee times the appropriate attribution factor. The standard provides a Data Quality Score based on the information found for investees, which is directly linked to uncertainty. Lower scores are associated with lower uncertainty (score of 1 represents best data quality, score of 5 represents broadest estimates based on industry average).

Since 2022, data quality scores have improved from 5 to 4.7 for the lending portfolio, and from 4.3 to 2.4 for the bank investment portfolio, with respect to scope 1 and 2 financed emissions.

Correction of the 2022 financed emissions

Corrections were made due to: for the Bank investment portfolio, a slight calculation error; for the Credit portfolio, a calculation error (switch between data relating to companies' turnover and assets) and an attribution factor's revised rule, with major impact on results.

Anticipated financial effects from material physical and transition risks and potential climate-related opportunities

Use of phase-in exemption

Banque Internationale à Luxembourg uses the phased-in approach for the following ESRS E1-9 disclosure requirements:

• ESRS E1-9 Exposure of the benchmark portfolio to climate-related physical risks paragraph 66: Phased-in approach used
• ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 (a): Phased-in approach used
• ESRS E1-9 Location of significant assets at material physical risk paragraph 66 (c): Phased-in approach used
• ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy-efficiency classes paragraph 67 (c): Phased-in approach used
• ESRS E1-9 Degree of exposure of the portfolio to climate-related opportunities paragraph 69: Phased-in approach used

Regulatory references

The company references the following regulations in relation to E1-9 disclosures:

• Delegated Regulation (EU) 2020/1818, Annex II
• Delegated Regulation (EU) 2020/1816, Annex II
• Regulation (EU) No 575/2013, Article 449a
• Commission Implementing Regulation (EU) 2022/2453

Policies related to own workforce

BIL has implemented a comprehensive set of policies related to its own workforce, covering diversity, human rights, workplace safety, employee development, and anti-discrimination.

Responsible Employer Policy

Scope: All BIL employees across global operations, covering activities related to recruitment, onboarding, training, performance management, and regulatory compliance. No exclusions regarding specific employee demographics or geographical locations.

Key content:

• Acknowledges the diverse composition of the workforce (origins, nationality, age, gender, expertise)
• Prioritises effective management of diversity through a dedicated strategy
• Integrates diversity into all HR processes and employee management practices
• Promotes work-life balance and professional development
• Supports principles including the Right to Disconnect Policy, Teleworking Charter and Policy, Flexitime Management Policy

Governance: Implementation overseen by the Head of CEO Office. Department managers play a critical role in facilitating feedback and training initiatives.

Alignment with standards: Aligns with the principles of the United Nations Global Compact, particularly regarding human rights and decent work, as well as industry best practices in performance management and employee retention.

Public availability: Made available to all employees via the Bank's intranet.

Feedback Model Policy

Scope: All BIL employees across global operations.

Key content:

• Establishes a framework for open communication
• Allows constructive feedback that enhances both engagement and development

Governance: Overseen by the Head of CEO Office. People Care, Benefits and Solutions team oversees engagement and feedback surveys, with the People Care, Benefits and Solutions Manager leading the organisational process.

Employee Retention Policy

Scope: All BIL employees across global operations.

Key content:

• Aims to minimise turnover by offering career development opportunities
• Supports employee development through retention programs including:
  • Youth program
  • Talent management programs
  • Leadership programs
  • Specific training and development add-on

Governance: Overseen by the Head of CEO Office.

Regulatory and Mandatory Trainings Policy

Scope: All BIL employees across global operations.

Key content:

• Ensures employees are well-equipped with necessary compliance knowledge through ongoing training initiatives

Governance: Overseen by the Head of CEO Office.

Diversity Charter – BIL Management Body

Scope: All entities within BIL Group, encompasses the management body in both supervisory and management functions. Designed to ensure diversity principles are adapted to the specific context of each subsidiary while maintaining compliance with local regulations.

Key content:

• Enhances decision-making process by fostering diverse perspectives
• Reduces groupthink
• Creates an inclusive environment reflecting variety of backgrounds, experiences, and skills
• Sets measurable objectives, including specific targets for gender representation:
  • Phase 1 (2020): Minimum of three individuals from underrepresented gender (at least 5%)
  • Phase 2 (2024): Minimum of five individuals (at least 10%), excluding Staff Representatives at Board of Directors level
  • Phase 3 (2028): Minimum of 30% representation among combined Executive Committee and Board of Directors
• Priority given to candidates from underrepresented gender when selecting Management Body members, provided comparable qualifications

Governance: Most senior level accountable is the Board of Directors. Direct oversight and responsibility delegated to the Board Remuneration and Nominations Committee (BRNC-N), which is tasked with selecting, assessing, and proposing appointments for members of the management body. Annual monitoring through BRNC-N, which assesses implementation and effectiveness annually and makes recommendations for amendments.

Public availability: Made available to all employees through BIL's internal communication channels.

Human Rights Policy

Scope: All BIL employees, encompasses the entire workforce, both in Luxembourg and in international operations. Covers every employee, manager, and executive member.

Key content:

• Respect for Human Rights: Upholds rights of all employees, ensuring fair treatment and non-discrimination based on sexual identity, gender expression, ethnicity, nationality, religion, age, disability, and other legally protected categories
• Diversity, Inclusion, and Equal Opportunities: Internal policies regarding recruitment, management, promotion, compensation, and employee development grounded in respect and equality. Fosters workplace where individuals from diverse backgrounds are valued and provided equal opportunities
• Labour Rights: Rejects child labour, forced labour, and human trafficking. Respects employees' rights to freedom of association and collective bargaining
• Occupational Health and Safety: Prioritises employee well-being through rigorous health and safety measures, in line with the Occupational Health and Safety Policy
• Work-Life Balance and Professional Development: Supports employees in achieving healthy work-life balance and provides opportunities for professional growth
• Discriminatory Use of Technology: Actively avoids discriminatory use of technology that could jeopardise employee security and equality
• Whistleblowing Compliance: Established secure channels for reporting concerns related to human rights violations without fear of retaliation through Whistleblowing Charter

Governance: Head of Sustainable Development is accountable for implementation with support of the Human Resources Department. Aligns with the Board of Directors' Code of Ethics.

Alignment with standards: Committed to adhering to the UN Guiding Principles on Business and Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work. Aligns with UN Global Compact (UNGC) Principles.

Public availability: Made available to all employees via the Bank's intranet.

Monitoring: BIL ensures compliance through ongoing assessments of recruitment, management, promotion, and compensation practices, along with actively engaging employees to collect feedback and evaluate policy effectiveness. Regular communication and training on the Code of Ethics ensure workforce understands their rights and responsibilities.

Occupational Health & Safety Policy

Scope: All BIL employees. Applies across the Bank's operations.

Key content:

• Rooted in fundamental values of caring for employee well-being and safety
• Provides work environment free from hazards
• Grounded in belief that everyone is intrinsically accountable for their own safety
• Emphasises importance of advocating for risk-free working conditions
• Promotes physical health and safeguards psychosocial health
• Includes principles focused on safety, health, and well-being
• Designates Designated Worker as pivotal figure with responsibilities for:
  • Information and training
  • Prevention of occupational risks
  • Establishing robust organisational framework in workplace
  • Conducting comprehensive analyses of safety and health risks
  • Providing proactive advice to eliminate or mitigate risks
  • Meticulously managing safety registers
  • Vigilantly monitoring regulatory obligations
  • Participating in formulating company's overall strategy for workforce safety and health
  • Evaluating Bank's safety and health situation
  • Developing, updating, and disseminating safety plans, emergency plans, and intervention protocols
  • Managing relationships with Labor and Mines Inspectorate, control bodies, occupational health services, and emergency services

Governance: Designated Worker mandated by employer. Participates in internal commissions related to Hygiene, Health, and Safety.

Alignment with standards: Draws upon Labor Code Book III (articles L.311-1 to L314.4 and L321-1 to L327-2), Grand-Ducal Regulation of 04/11/1994 on safety and health at work, and Grand-Ducal Regulation of June 9, 2006. Committed to adhering to third-party standards.

Public availability: General Safety and Health Rules (GSSR) provided to employees and external service providers. Supplier Code of Conduct available.

Monitoring: Regular assessments, safety audits, and meticulous management of safety registers ensure compliance with legal and regulatory provisions. Implementation adheres to legal requirements, Grand-Ducal and ministerial regulations, and standard prescriptions.

Policy Against Psychological and Sexual Harassment

Key content:

• Addresses discrimination and harassment
• Promotes equal opportunities and advances diversity and inclusion
• Key issues include discrimination and harassment, freedom of expression and opinion, right to privacy and data protection

Monitoring: BIL has established specific procedures to prevent, mitigate, and address discrimination, and to advance diversity and inclusion through:

• Mentorship programs to promote an inclusive culture
• Mandatory Diversity Training: Enhances understanding of diversity, equity, and inclusion (DEI) by exploring socialisation processes, bias formation, and impact of backgrounds on social integration
• Code of Ethics Training: Mandatory module elaborating on principles and standards guiding Bank's professional conduct and decision-making, ensuring transparency and fairness. Embodies BIL's core values of integrity, transparency, and respect
• Diversity, Equity, and Inclusion Conference: Allows participants to delve into these concepts and address potential unconscious biases

Luxembourg Diversity Charter (signatory)

Key content:

• Promotes raising awareness and training management and staff on diversity issues
• Defining a diversity charter and implementing best practices and action plans
• Applying principles of equality, opportunity, and promotion
• Evaluating effects and results of these principles
• Sharing commitments and results with all stakeholders
• Encouraging work that combats discrimination and promotes diversity

Equal Career Opportunities Policy

Key content:

• BIL strongly committed to equal career opportunities for men and women, with ambitious targets for gender balance
• HR department implementing various actions to ensure no discriminatory decisions across HR processes
• BIL Switzerland obtained "Fair-ON-Pay" certification for two-year period (2024)
• BIL Switzerland became member of Advance Gender Equality in Business Diversity Charter committing to achieve gender balance at all levels

Taking action on material impacts on own workforce

BIL has implemented several strategic actions to address material impacts on its own workforce, focusing on diversity and inclusion, employee development, and human rights. The actions cover BIL Group's own workforce and align with objectives in the Bank's Diversity Charter.

ACTIONS ON DIVERSITY AND INCLUSION

To deliver positive impacts of diversity and inclusion and to mitigate negative impacts and associated risks, BIL has implemented the following actions:

1. Diversity Charter

• BIL has adopted, published, and actively promoted a Diversity Charter to demonstrate commitment to fostering a diverse and inclusive workplace
• Scope: Own workforce
• Management: Supported by the Human Resources department

2. Clear Governance and Recruitment Processes

• A transparent governance structure has been established for recruitment and assessment of Management Body members
• Ensures diversity considerations are integrated into hiring practices

3. Setting Quantitative Targets

• Specific quantitative targets for increasing representation of underrepresented genders within the Management Body:
  • Phase 1 (2020): Achieve minimum of three individuals from underrepresented gender among Management Body members (at least 5%)
  • Phase 2 (2024): Increase to minimum of five individuals (at least 10%), excluding Staff Representatives at Board of Directors level
  • Phase 3 (2028): Reach minimum of 30% representation among combined Executive Committee and Board of Directors
• Time horizon: Short to long term (2020-2028)
• Monitoring: Part of on-going and annual suitability assessment

4. Mandatory Diversity Training

• Enhances understanding of diversity, equity, and inclusion (DEI)
• Explores socialisation processes, bias formation, and impact of backgrounds on social integration
• Contributes to a more inclusive work environment

5. Succession Planning

• The Bank closely monitors succession planning processes, critical for ensuring diversity in leadership roles
• Monitored closely as particularly crucial for the Charter

6. Priority in Candidate Selection

• Priority given to candidates from underrepresented gender for Management Body positions when possessing comparable qualifications to other candidates

BIL Switzerland Specific Actions:

• Fair-ON-Pay Certification (2024): Obtained for two-year period, enabling promotion of equal pay values throughout employees. Certification awarded after rigid audit process assessing all compensation elements through unbiased scientific analysis
• Advance Gender Equality in Business Diversity Charter: BIL Switzerland became member, committing to achieve gender balance at all levels across the Bank

Effectiveness Assessment:

• The Bank's Risk and Nomination Committee monitors diversity criteria and targets
• HR department monitors diversity KPIs to assess performance against diversity targets and determine if remedial action is needed
• The Bank ensures no collateral discrimination while promoting diversity

ACTIONS ON EMPLOYEE DEVELOPMENT AND TRAINING

BIL Academy and Training Programs

• Comprehensive training and development opportunities for all staff through:
  • Online training platform
  • Ad-hoc conferences
  • Special events
  • Mandatory and regulatory training
• Employees encouraged to pursue specific training requests (validated by manager and HR representative)
• Scope: All staff
• Resources: Non-financial - BIL Academy platform and HR support

Employee Retention Programs:

• Youth Program: For smooth career growth and job opportunities
• Talent Management Initiatives: For specific staff members
• Leadership Development Programs: For specific staff members
• Expected outcomes: Career growth and creation of job opportunities

Program Assessment and Development:

• Regular assessments of training programs to ensure they meet employees' needs and expectations
• Continuous development of tailored training solutions to address skill gaps
• Promotion of feedback culture where employees can voice training needs
• HR department tracks various performance metrics

ACTIONS ON HUMAN RIGHTS

Human Rights Policy Implementation

• Operationalised through Human Rights Policy aligned with UN Global Compact (UNGC) Principles
• Incorporates compliance with Board of Directors' Code of Ethics
• Scope: Every employee, manager, and executive member Group-wide

Communication and Training:

• Regular communication and training on Code of Ethics
• Resources: Leadership training focused on ethical practices
• Expected outcomes: Workforce understands rights and responsibilities, fostering awareness and cultivating culture of respect and inclusion

Reporting Channels:

• Effective communication channels empower employees to report potential human rights impacts without fear of retaliation
• Privacy protection remains priority in processes
• Implemented Group-wide to ensure alignment with policy objectives

HR Department Role:

• Key driver developing and implementing policies, training programs, and supporting systems
• Foster culture of respect and inclusion
• Ensure all employees understand rights and responsibilities
• Promote open communication and collaboration with labour unions

Characteristics of the undertaking's employees

Employee composition

Total headcount by gender

Scope: BIL Group

Definition: Headcount of employees is defined as the total number of employees active as of 31/12/2024. Active employees include permanent and temporary employees, employees on maternity leaves and sickness leaves, but does not include employees on parental leaves or career breaks.

Headcount by region

Headcount by employment type and contract type

Scope: BIL Group

Definitions:

• Permanent employees: internal employees with an indefinite contract with BIL Group
• Temporary employees: internal employees with a fixed-term contract with BIL Group
• Full-time employees: employees working full time (100%) under BIL Group
• Part-time employees: employees with working time less than 100%
• Non-guaranteed employees: not applicable to BIL Group

Note: The number of employees, represented in full-time equivalent, can be found in Section 3.2 of Note 3 of the Annual Report and is validated by the financial auditor of the Group.

Employee turnover

Turnover by gender

Scope: BIL Group

Definition: The turnover of employees has been calculated as the aggregate of the number of permanent employees who left voluntarily or due to dismissal, retirement, or death in service. Turnover does not include temporary employees, employees on parental leaves, garden leaves or career breaks. The rate of turnover is calculated as the total permanent employee turnover in the reporting period divided by the average turnover of permanent employees between 31 December 2023 and 31 December 2024.

Employee diversity by age

Scope: BIL Group

Characteristics of non-employees in the undertaking's own workforce

Composition of non-employee workforce

BIL Group utilizes external resources, including:

• Consultants
• Interim workers
• Interns
• Temporary student positions

These resources support operational needs in addition to the internal staff.

Scope and methodology note

The Double Materiality Assessment excludes non-employees and external staff from its scope. Material impacts, risks and opportunities have been limited to all people employed under BIL Group as permanent employees (with indefinite contracts) and temporary employees (with fixed-term contracts).

No quantitative metrics for non-employee workforce characteristics are disclosed.

Collective bargaining coverage and social dialogue

Collective Bargaining Agreement Coverage

BIL recognises the importance of the Collective Bargaining Agreement (CBA) in safeguarding the rights and interests of its employees. Most employees at Luxembourgish banks, including BIL, are protected under this agreement, which is negotiated every three years between the industry's unions and the directors of the Association of Luxembourg Banks and Bankers (ABBL). A new agreement replacing the previous agreement has been established for the period 2024-2026.

Scope of employees covered: The CBA primarily covers general workers, but its provisions also extend to managers and executives in certain areas. All employees of BIL Luxembourg and BIL Lease are covered under this Collective Bargaining Agreement. Employees of Belair House, BIL Manage Invest, BIL Switzerland, BIL China, and BIL Hong Kong are not governed by this agreement.

Coverage metrics by region

Scope: BIL Group

Methodology: The percentage of employees covered by collective bargaining agreements is calculated by: (Number of employees covered by collective bargaining agreements / Total number of employees) × 100

Coverage rate breakdown

Europe includes only Switzerland (non-EEA country)

Workers' Representatives Coverage

BIL Group has no existing agreement with its employees for representation by the European Works Council (EWC), Societas Europaea (SE) Works Council, or the Societas Cooperativa Europaea (SCE) Works Council.

Workplace representation for Luxembourg:

Scope: BIL Luxembourg

Methodology: Workplace representation for Luxembourg is calculated as the number of employees covered by the union in Luxembourg divided by the headcount of employees working under BIL Luxembourg.

Social Dialogue Bodies

Staff Delegation and Trade Unions: The Staff Delegation at BIL advocates for the welfare and rights of employees, focusing on their working conditions, job security, and social standing. Empowered by Luxembourg's legal framework, staff representatives have access to vital information and are consulted by management before finalising significant decisions.

Staff representatives have their seat at the Board of Directors ensuring that the interests of various stakeholders, including employees, shareholders, and customers, are effectively represented and addressed.

Trade unions play a crucial role in the banking sector by facilitating communication and negotiation between employees and management. They address employee concerns, improve workplace conditions, and promote fair labour practices, contributing to a harmonious work environment and enhancing productivity.

Diversity metrics

Gender distribution of BIL's top management

Scope: BIL Group

Methodology note: At BIL Group, employees are categorised by their job class, represented by letters for non-executives and numbers for executives. Employees between personal job classes A-D are defined as "employee". Employees in personal job classes 15-17 are termed as "executive" while employees under 18-19 are considered "senior executive". Top management is defined as any employee in the personal job class between 20 and 24. Top management includes the Executive Committee (ExCo) of the Bank.

Headcount of employees by age

Scope: BIL Group

Adequate wages

ESRS S1-10 (Adequate wages) is reported as not material for BIL in the sustainability statement.

No disclosure on adequate wages benchmarks, coverage, methodology, or targets is provided.

Social protection

ESRS S1-11 (Social protection) is assessed as not material for BIL.

No quantitative disclosure on the percentage of employees covered by social protection against loss of income from major life events (sickness, maternity, paternity, disability, unemployment, retirement) has been provided.

Persons with disabilities

ESRS S1-12 is identified as not material for BIL according to the disclosure requirements table on page 35 of the Sustainability Report 2024.

No quantitative data on the percentage of employees with disabilities has been disclosed.

Training and Skills Development Metrics

Training Hours

Training by Category

BIL provides comprehensive training programs across various categories:

Professional Development

• Technical skills training related to banking operations
• Regulatory compliance training
• Leadership and management development programs
• Language training to support international client base

ESG and Sustainability Training

• ESG principles and sustainable finance
• Climate risk management
• Responsible investment practices
• Environmental awareness programs

Technology and Digital Skills

• Cybersecurity awareness training (216 employees trained)
• Digital banking platforms and tools
• Data protection and privacy training
• Innovation and digitalisation workshops

Compliance and Risk Management

• Anti-money laundering (AML) training
• Know Your Customer (KYC) procedures
• Risk management frameworks
• Business conduct and ethics

Training Delivery Methods

In-Person Training

• Classroom-based sessions
• Workshops and seminars
• On-the-job training and mentoring

Digital Learning Platforms

• E-learning modules
• Virtual training sessions
• Online certification programs
• Webinars and digital conferences

External Training and Education

• Professional certification programs
• Industry conferences and seminars
• University partnerships for advanced education
• Cross-industry learning initiatives

Training Investment

BIL demonstrates its commitment to employee development through significant investment in training and development programs. The Bank recognises that continuous learning is essential for maintaining competitiveness, ensuring regulatory compliance, and supporting career progression.

Skills Development Initiatives

Career Development Programs

• Individual development planning
• Succession planning initiatives
• Cross-functional project assignments
• Mentorship and coaching programs

Specialised Training Programs

• Training courses for relationship managers in climate change adaptation and mitigation
• ESG training for investment professionals
• Digital transformation training for all employees
• Customer service excellence programs

Continuous Improvement

• Regular assessment of training effectiveness
• Employee feedback on training programs
• Adaptation of training content to meet evolving business needs
• Integration of new technologies in training delivery

The Bank's commitment to employee development is reflected in the high average training hours per employee, demonstrating its investment in building capabilities and ensuring employees can effectively serve clients while adapting to evolving market demands and regulatory requirements.

Health and safety metrics

BIL has determined that ESRS S1-14 (Health and safety indicators) is not material for the Bank.

According to the disclosure requirements table on page 35 of the sustainability report:

As stated in the cross-reference table on page 131:

Coverage of health and safety management system:

While no quantitative metrics are disclosed, BIL has implemented a comprehensive Occupational Health & Safety Policy that covers all BIL employees across Luxembourg and international operations. The policy is grounded in Grand-Ducal Regulations and adheres to ITM (Inspection du Travail des Mines) and AAA (Association d'Assurance Accident) guidelines. A Designated Worker is mandated to ensure safety and health of all employees.

Compensation metrics

Pay gap

Not disclosed.

BIL references its Fair-ON-Pay certification, which verifies that the gender pay gap does not statistically exceed a pre-defined threshold. The Bank states that it has been certified by Fair-ON-Pay in 2024, an association that is a member of EPIC (Equal Pay International Coalition founded by the ILO, UN Women, and the OECD). The certification is only awarded after a rigid audit process where all elements of compensation of employees have been assessed through an unbiased and scientific analysis proving that the gender pay gap does not statistically exceed a pre-defined threshold.

However, no specific percentage figure for the gender pay gap (unadjusted or adjusted) is disclosed in the report.

Remuneration ratio

Not disclosed.

Phase-in statement

According to the disclosure requirements table (page 36-37), ESRS S1-16 "Gender pay gap and remuneration ratio" is marked as "Not material for BIL." This suggests the company may be using materiality to exclude this disclosure requirement.

Incidents, complaints and severe human rights impacts

2024 Data

The following table presents BIL's incidents, complaints, and severe human rights impacts for the reporting year 2024:

Scope: BIL Luxembourg and national entities

Non-respect of international standards

In 2024, no cases of non-respect of the UN Guiding Principles on Business and Human Rights, ILO Declaration on Fundamental Principles and Rights at Work or OECD Guidelines for Multinational Enterprises that involve consumers and/or end-users have been reported in BIL's downstream value chain.

Grievance mechanisms and protections

BIL has established comprehensive grievance mechanisms for employees to confidentially report employment-related issues, concerns, or complaints. The Bank has implemented robust anti-retaliation protections, including:

• Explicit prohibition of retaliation against employees who raise concerns
• Confidential reporting procedures
• Monitoring and enforcement by a joint harassment committee
• Active communication of protections to all employees

The Policy against Psychological and Sexual Harassment is filed with the Labour and Mines Inspection (ITM) and communicated to representative trade unions at both national and sectoral levels.

Policies related to consumers and end-users

BIL addresses consumers and end-users primarily through its data protection and privacy policies, which govern how personal data of clients and prospects is handled.

Personal Data Protection Charter

• Approval and oversight: Formally approved by the Board of Directors
• Scope: Applies to the processing and protection of personal data of employees, clients, prospects and all natural persons in contact with BIL Group
• Key content: Provides the necessary foundations for an effective culture to protect the personal data of all natural persons
• Linkage to international standards: Ensures compliance with all requirements set by Regulation (EU) 2016/679 (General Data Protection Regulation or GDPR)
• Monitoring: The Charter, Policy and Procedures are under permanent review and updated when needed; available on BIL's internal platform

Personal Data Protection Policy

• Scope: Applies to all staff members processing personal data of BIL's clients, prospects, employees and third parties
• Key content: Complements the Charter and provides guidelines ensuring that all staff members process personal data in accordance with GDPR requirements; explains in detail the different principles relating to the processing of personal data
• Linkage to international standards: Ensures full compliance with Regulation (EU) 2016/679 (GDPR)
• Monitoring: Managers are responsible for ensuring and demonstrating that personal data is processed according to GDPR rules by supervising that staff members are adequately trained, informed and consult the DPO in case of questions or doubts

Privacy Notices

BIL has established several privacy notices to inform different stakeholder groups:

• Privacy Notice for employees of BIL and its Luxembourg-based entities (published internally and sent to new joiners)
• Privacy Notice for Third-Party staff (communicated to external staff on mission at BIL)
• Privacy Notice for applicants (published on BIL recruitment website: https://stayforacareer.com/privacy-notice/)
• Privacy Notice for clients and prospects (joined to the Bank's General Terms and Conditions and separately available at: https://www.bil.com/Documents/documentation-legale/conditions-generales-en.pdf)

Data Protection Governance

• Oversight: A Data Protection Officer (DPO) has been officially appointed who is independent and reports to the Chief Compliance Officer. The DPO monitors BIL's compliance with GDPR and regularly reports to Senior Management on data protection activities and KPIs
• Key processes: BIL has established a register of processing activities, Privacy by Design documentation for new activities, a dedicated Third-Party Committee (attended by the DPO, CISO and ITSO), procedures for handling data breaches and data subjects' requests
• Linkage to international standards: Compliance with the United Nations Guiding Principles on Business and Human Rights (UNGPs) and OECD Guidelines is referenced in the materiality mapping table

Business conduct policies and corporate culture

Corporate Culture

BIL has articulated its new "Why" as "Building Tomorrow Together," which serves as a guiding principle for its operations and corporate culture. This statement encapsulates the organisation's commitment to creating a better future through collaborative efforts, innovation, and proactive engagement with clients and communities.

The values of BIL — Caring, Leading, Engaging, Accessible, and Reliable (CLEAR) — are essential for effectively living out the "Building Tomorrow Together" ethos. Each value plays a vital role in ensuring that the organisation operates in a way that resonates at every level.

• Caring: This value emphasises empathy and open-mindedness. By fostering a culture of caring, BIL encourages employees to consider the needs and perspectives of clients and colleagues, which is critical for building strong relationships and community trust.
• Leading: Leading by example and inspiring others is key to this value. BIL promotes a culture where employees are empowered to take initiative and act as role models.
• Engaging: Personal commitment, dedication, and passion are at the heart of this value. BIL believes that engaged employees are more likely to contribute effectively to the organisation's mission.
• Accessible: Approachability and credibility are fundamental to this value. BIL fosters an environment where open communication is encouraged.
• Reliable: This value underscores the importance of integrity and accountability. By committing to follow through on promises and responsibilities, BIL builds trust with clients and colleagues.

Governance: The introduction of these values was formally presented to all employees during a dedicated townhall meeting, where the Executive Committee, led by the CEO, articulated the significance of each value. The values were integrated into the 2025 Leadership Program and 2024 feedback forms. The values are prominently displayed throughout the Bank's premises through visual representations such as posters and digital screens.

Links to standards: The BIL Code of Ethics complements this "Why" and its values by providing a framework for ethical decision-making and behaviour that aligns with the principles of Caring, Leading, Engaging, Accessible, and Reliable.

Code of Ethics

BIL has implemented a Code of Ethics that lays down the guiding conduct and ethical principles along with BIL Group's corporate values for professional and ethical conduct.

Scope: The Code applies universally to all staff across BIL Group entities. All Staff Members are individually responsible for adhering to and complying with the values and the principles set out in this Code. Observance of the Code and all provisions set up by BIL Group charters, policies or procedures constitutes a professional obligation.

Governance: The Code of Ethics is under the responsibility of the Board of Directors and the Executive Committee. The Board of Directors is assisted in this task by the Compliance and Risk Management departments, in collaboration with the Human Resources department for the drafting of the guiding conduct, ethical principles and corporate values; the development of the Code of Ethics; and conducting thorough reviews of the Code of Ethics.

Key content/principles:

• Fairness and transparency: All staff must perform their duties loyally and with mutual respect, adhering to established ethical standards. When interacting with clients, staff are required to communicate in a balanced, fair, clear, and accurate manner.
• Use of social media: All staff members must maintain a positive image of BIL Group. This includes refraining from sharing sensitive information or engaging in any behaviour online that could harm the Bank's reputation.
• Personal accounts and transactions: Staff must avoid any personal transactions that could create a conflict of interest. This includes refraining from trading financial instruments that they may encounter through their work.
• Improper Transactions: Staff are prohibited from engaging in excessive or inappropriate trading activities, such as intraday trading or excessive buying and selling.
• Secondary activities: Staff members are prohibited from engaging in any professional activities or occupations that may compete with or conflict with their responsibilities at BIL.
• Financial situation: Staff are expected to manage their personal finances responsibly and in compliance with legal and contractual obligations.
• Confidentiality and data protection: Staff must maintain the utmost discretion regarding sensitive information obtained in the course of their work. Professional secrecy is paramount.
• Mutual respect: Discrimination on any basis—such as race, gender, religion, or political beliefs—is strictly prohibited.

Public availability: The Code of Ethics is made accessible to all employees via the Bank's intranet.

Links to standards: The Code of Ethics aligns with the principles of the United Nations Global Compact, particularly regarding human rights and decent work. BIL is committed to adhering to the UN Guiding Principles on Business and Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work.

Monitoring: The non-compliance to applicable provisions may result in disciplinary actions that could ultimately lead to dismissal. A disciplinary committee assisted by a disciplinary investigation team has been set up to analyse files submitted and decide upon adequate sanctions. The Compliance department has a dedicated session regarding fraud on its annual compliance activity report that is presented to the Board of Directors and submitted to the regulator.

Diversity Charter

BIL has adopted, published, and actively promoted a Diversity Charter to demonstrate its commitment to fostering a diverse and inclusive workplace.

Scope: The Diversity Charter applies to all entities within BIL Group and encompasses the management body in both supervisory and management functions. It is designed to ensure that diversity principles are adapted to the specific context of each subsidiary while maintaining compliance with local regulations.

Governance: The most senior level accountable for the implementation of the Diversity Charter is the Board of Directors, with direct oversight and responsibility delegated to the Board Remuneration and Nominations Committee (BRNC-N). The BRNC-N is tasked with selecting, assessing, and proposing appointments for members of the management body, ensuring that diversity criteria are integrated into all stages of the nomination process.

Key content/principles:

• The Charter includes a target for gender representation within the management body and establishes a process for monitoring progress through the BRNC-N, which is responsible for assessing the implementation and effectiveness of the Charter on an annual basis.
• Phase 1 (2020): Achieve a minimum of three individuals from the underrepresented gender among Management Body members (at least 5%).
• Phase 2 (2024): Increase to a minimum of five individuals (at least 10%), excluding Staff Representatives at Board of Directors level.
• Phase 3 (2028): Reach a minimum of 30% representation among the combined Executive Committee and Board of Directors.
• Candidates will be considered against objective criteria, with priority given to candidates from the underrepresented gender, provided they possess comparable qualifications.

Public availability: The Diversity Charter is made available to all employees through BIL's internal communication channels.

Links to standards: While the Charter itself does not specify individual third-party standards, BIL actively monitors and aligns its practices with relevant regulatory frameworks and best practices in diversity and inclusion. The Bank is a signatory of the Luxembourg Diversity Charter.

Monitoring: The monitoring of the diversity criteria and target set up are part of the on-going and annual suitability assessment. The Bank's Risk and Nomination Committee (BRNC) makes annual recommendations to the Board regarding necessary amendments to the Diversity Charter, based on performance against targets. If diversity objectives are not met, the BRNC documents the reasons for the shortfall and defines corrective measures, including timelines for achieving the targets.

Human Rights Policy

The Human Rights Policy outlines commitments with respect to employees.

Scope: The Human Rights Policy applies to all BIL employees and encompasses the entire workforce, both in Luxembourg and in international operations.

Governance: The Head of Sustainable Development is accountable for its implementation with support of the Human Resources Department.

Key content/principles:

• Respect for Human Rights: The Bank upholds the rights of all employees, ensuring fair treatment and non-discrimination based on sexual identity, gender expression, ethnicity, nationality, religion, age, disability, and other legally protected categories.
• Diversity, Inclusion, and Equal Opportunities: Internal policies regarding recruitment, management, promotion, compensation, and employee development are firmly grounded in the principles of respect and equality. The Bank is dedicated to fostering a workplace where individuals from diverse backgrounds are valued and provided equal opportunities for growth and advancement.
• Discriminatory Use of Technology: BIL actively avoids the discriminatory use of technology that could jeopardise employee security and equality.
• Whistleblowing Compliance: The Bank established secure channels for reporting concerns related to human rights violations without fear of retaliation through its Whistleblowing Charter.

Public availability: The policy is made available to all employees via the Bank's intranet.

Links to standards: BIL is committed to adhering to the UN Guiding Principles on Business and Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work. BIL is committed to making every effort to foster meaningful relationships with clients based on openness and transparency, without regard to gender, race, language, sexual orientation, nationality, beliefs, political opinions, or religion.

Monitoring: BIL ensures compliance with these commitments through ongoing assessments of its recruitment, management, promotion, and compensation practices, along with actively engaging employees to collect feedback and evaluate the effectiveness of its policies.

Occupational Health & Safety Policy

BIL has implemented a comprehensive workplace accident prevention policy, known as the Occupational Health & Safety Policy.

Scope: The policy covers all BIL employees and extends to external service providers.

Governance: The policy is rooted in the fundamental values of caring for employee well-being and safety. A Designated Worker is mandated by the employer to ensure the safety and health of all employees. The Designated Worker participates and engages actively with ITM (Inspection du Travail des Mines), CIN (Commission Nationale de l'Informatique et des Libertés), CGDIS (Corps Grand-Ducal d'Incendie et de Secours), ASTF (Association de Secours et de Traitement des Accidents du Travail), and AAA (Association d'Assurance Accident).

Key content/principles: The policy reflects BIL's commitment to providing a work environment that is free from hazards. It is grounded in the belief that everyone is intrinsically accountable for their own safety. The Designated Worker is mandated to ensure information and training, prevention of occupational risks, and establishing a robust organisational framework in the workplace.

Links to standards: The policy draws upon the Labor Code Book III, the Grand-Ducal Regulation of 04/11/1994 on safety and health at work, and the Grand-Ducal Regulation of June 9, 2006. In adherence to legal requirements, Grand-Ducal and ministerial regulations, and standard prescriptions, BIL has effectively implemented this health and safety management system.

Monitoring: Monitoring is conducted through regular assessments, safety audits, and meticulous management of safety registers to ensure compliance with legal and regulatory provisions. The Designated Worker conducts comprehensive analyses of safety and health risks and provides proactive advice to eliminate or mitigate these risks.

Policy against Psychological and Sexual Harassment

The Policy against Psychological and Sexual Harassment aims to foster a safe and respectful workplace by outlining unacceptable behaviours and the reporting process for employees.

Scope: Employees of BIL Luxembourg and national subsidiaries are governed by this policy.

Governance: The policy is implemented by the Head of Human Resources.

Key content/principles: All staff at BIL Group, including management, national and international subsidiaries, including external and temporary staff, are protected from discrimination, harassment, and any actions that undermine their dignity, promoting a safe and inclusive working environment.

Public availability: The policy is made available to all employees via the Bank's intranet.

Links to standards: This policy is a fundamental component of BIL's Internal Regulations and is filed with the Labour and Mines Inspection (ITM) and is communicated to representative trade unions at both national and sectoral levels.

Monitoring: BIL has established specific procedures to prevent, mitigate, and address discrimination, as well as to advance diversity and inclusion. The monitoring of grievances is overseen by a joint harassment committee, which includes representatives from HR, legal, and the Staff Delegation.

Responsible Employer Policy

While not detailed extensively in the excerpts, the Responsible Employer Policy is mentioned as reaffirming the principles of Human Rights and highlighting the need to prevent discrimination across all HR processes and decisions.

Teleworking Charter and Policy

While not detailed extensively in the excerpts, the Teleworking Charter and Policy is mentioned as reaffirming the principles of Human Rights.

Flexitime Management Policy

While not detailed extensively in the excerpts, the Flexitime Management Policy is mentioned as reaffirming the principles of Human Rights.

BIL Group Anti-Bribery and Corruption Charter (ABC Charter)

The cornerstone of BIL's framework to prevent, detect, and address allegations or incidents of corruption and bribery is the BIL Group Anti-Bribery and Corruption Charter (ABC Charter).

Scope: The ABC Charter applies to all BIL entities and encompasses a wide range of activities across the Bank's operations, addressing both upstream and downstream value chains.

Governance: The Chief Compliance Officer is accountable for the implementation of the ABC Charter, ensuring that the principles outlined are effectively integrated into BIL's operations and that compliance is maintained across all levels of the organisation.

Public availability: The ABC Charter, along with other relevant policies and procedures, are available on the Bank's intranet, ensuring that all employees and stakeholders who need to implement it have access to the necessary information.

Links to standards: The ABC Charter is aligned with several important international standards and initiatives, including the recommendations of the Organisation for Economic Cooperation and Development (OECD), the Council of Europe's Group of States against Corruption (GRECO), the OECD Anti-Bribery Convention (1997), the United Nations Convention against Transnational Organised Crime (2000), the United Nations Convention Against Corruption (2003), and the Wolfsberg Anti-Bribery and Corruption Compliance Program Guidance (2017).

Financial Crime Prevention Charter and Policy

The Financial Crime Prevention Charter and Policy is mentioned as part of BIL's comprehensive framework of Charters, Policies, and Procedures designed to prevent, detect, and address allegations or incidents of corruption and bribery.

Scope: The Charter applies to all BIL entities.

Governance: The Chief Compliance Officer is responsible for implementation.

Key content/principles: To identify potential incidents related to customers involved in bribery or corruption, the Bank relies on its existing Financial Crime Prevention policies and framework. This includes measures such as name screening, transaction monitoring, and reviewing adverse media information.

Whistleblowing Charter

BIL has established robust internal whistleblower reporting channels to ensure that employees can report concerns safely and confidentially.

Scope: The Charter applies to all employees across BIL Group and covers a wide range of activities related to compliance and ethical conduct.

Governance: The Chief Compliance Officer of BIL Group is responsible for processing the alert, which includes receiving and following up on reports and communicating with both the reporting individual and the competent authority. If the alert concerns the Compliance Department, the Chief Internal Auditor handles the processing of the alert. The Charter is revised annually and approved by the Board.

Key content/principles: The Whistleblowing Charter outlines the main regulatory obligations for the BIL Group entities and provides principles for managing and monitoring whistleblowing obligations. Its key contents include provisions for the establishment of internal reporting channels, procedures for processing alerts, and safeguards for whistleblower confidentiality. When an employee of the BIL Group knows or reasonably suspects that wrongdoing or a reprehensible act has occurred or is about to occur, they can raise an internal alert to the "Designated Person." BIL Group guarantees that whistleblowers who present their concerns in good faith will not suffer any negative consequences. The confidentiality of the whistleblower's identity and the issues raised will be protected. Investigations are conducted under strict ethical guidelines, particularly with regard to privacy and the duty of self-restraint.

Public availability: The Whistleblowing Charter is publicly available and provides details for the public and external parties on how to handle an alert.

Gifts, Favours and Invitations Policy

The Gifts, Favours and Invitations Policy governs interactions involving gifts and hospitality.

Key content/principles: Staff must be vigilant to avoid situations that could lead to conflicts of interest or perceptions of undue influence. Accepting gifts or invitations should always be done judiciously, ensuring they do not compromise the integrity of the staff member or the organisation.

Governance: The policy is approved by the Board of Directors and implemented by the Chief Compliance Officer.

Scope: The policy governs all staff of BIL Group.

Public availability: The policy is made available on the intranet.

Charter on Conflicts of Interest

BIL has established a Charter on Conflicts of Interest dedicated to the identification, prevention, and monitoring of such conflicts.

Governance: The Charter is approved by the Board of Directors and implemented by the Chief Compliance Officer.

Scope: The Charter governs all staff of BIL Group.

Public availability: The Charter is made available on the intranet, with public versions available on BIL's website.

Managing BIL Group Purchases Policy (Procurement Policy)

BIL's Managing BIL Group Purchases Policy (also called the "Procurement Policy") establishes a framework for the selection and management of service providers and suppliers.

Scope: The policy applies to all BIL Group entities, both national and international. It covers the procurement of goods and services for routine business activities and approved projects. The purchase of goods and services as part of routine business activities and approved business line projects within the Bank and at national and international BIL Group entities. All purchasing categories within the Bank's business lines (i.e. IT, Corporate Real Estate, Market Data, Marketing, CEO Office, Training, Subcontracting, Consulting, Telecommunications, Supplies) apart from the Rent, Insurance, Brokers' Fees, Market Counterparties and Legal Services categories.

Governance: The Chief Financial Officer (CFO) is responsible for overseeing the drafting, implementation, and compliance of this procurement policy across all business lines, operating under the mandate of the CEO.

Key content/principles: The primary objectives include ensuring that procurement practices contribute to the Bank's performance and cost-effectiveness while minimising environmental and social impacts. The policy emphasises on responsible procurement practices, integrating sustainability criteria to create long-term value and uphold ethical and governance standards. In addition to evaluating bids from a financial perspective, BIL conducts objective assessments based on predefined criteria including technical, operational, and security capabilities; service quality and management capacity; risk prevention and business continuity; financial health and reputation; compliance with regulatory obligations; and ESG (Environmental, Social, and Governance) criteria.

Public availability: The Procurement Policy is made accessible to employees through the intranet while a public version of the policy (the Sustainable Procurement Policy) is available on BIL's website. Providers have online access to other related policies relevant to their business relationships with BIL. Additionally, all Requests for Proposal (RFP) packages include the Code of Conduct for Providers, the Guide to Implementation of Corporate Social Responsibility Policy by Suppliers and the ESG Assessment questionnaire.

Links to standards: The Procurement Policy aligns with recognised third-party standards – such as the United Nations Global Compact (UNGC) and the United Nations Sustainable Development Goals (UN SDGs), and initiatives related to responsible procurement and sustainability practices, ensuring that BIL commits to ethical business conduct throughout its supply chain.

Policy on Politically Exposed Persons (PEP)

The Policy on Politically Exposed Persons (PEP) is mentioned as part of BIL's comprehensive framework of Charters, Policies, and Procedures designed to prevent, detect, and address allegations or incidents of corruption and bribery.

Products and Services Governance Policy (New Product Approval Process Charter)

The Products and Services Governance Policy outlines the measures and principles applicable to BIL Group concerning its New Product approval process.

Scope: The principles and requirements of the New Product approval process apply at BIL Group level including all subsidiaries and branches of BIL Group.

Governance: The implementation of the Products and Services Governance Charter is accountable to the most senior level of the Bank's organisation, specifically the CEO and the Chief of Luxembourg Market & CIB. The Chief Compliance Officer is responsible for the implementation of the Charter. The Executive Committee exercises effective control over BIL's New Product approval process.

Key content/principles: Its primary objective is to ensure transparency in products and services by establishing clear responsibilities for all stakeholders involved in the process. The policy mandates compliance with all relevant transparency requirements when launching new products or making significant changes to existing ones. No new product shall be implemented unless the authorised management approved it in line with the process defined in this policy. For any new product or service, as well as for any material changes to existing offerings, a presentation for review and validation is submitted to the New Product Committee (NPC). For existing products and services, the Product Governance Committee (PCG) and/or the NPC conduct regular reviews.

Public availability: The Charter is made available to all employees through the intranet.

Links to standards: The Charter aligns with internationally recognised instruments relevant to consumers, including the United Nations (UN) Guiding Principles on Business and Human Rights, ensuring that consumer rights and interests are respected in product governance.

Monitoring: The Charter is approved annually by the administrative, management and supervisory bodies. The Bank maintains strong supplier relationships through internal policies that delineate principles to be followed throughout the contract lifecycle.

Client Complaints Handling Policy

The Client Complaints Handling Policy outlines the roles, responsibilities, and procedures for handling client claims effectively.

Scope: The scope of the Client Complaints Handling Policy includes all client claims received by any entity of the Bank.

Governance: The implementation of the policy is overseen by the CEO and the Chief Compliance Officer, who are responsible for ensuring adherence to the policy's procedures and standards.

Key content/principles: It aims to ensure that all client claims are addressed promptly and fairly. The Bank is committed to addressing consumer concerns effectively through a structured complaint management process. Upon receiving a complaint, BIL acknowledges the issue within 24 to 48 hours, providing information on the next steps and an estimated timeline for resolution. The complaint is then forwarded to the relevant department for a thorough and objective investigation. After the investigation, BIL communicates the resolution to the consumer.

Public availability: The policy is accessible through internal platforms and on BIL's website.

Links to standards: This policy aligns with relevant international standards for consumer protection and complaint handling, including the UN Guiding Principles on Business and Human Rights.

Monitoring: Monitoring of the policy is conducted through yearly follow-ups by the Compliance department, as well as ad hoc reviews and reporting to assess the policy's effectiveness. BIL employs a robust tracking system that monitors all complaints in a centralised database, allowing for real-time status updates and regular reporting on complaint trends and resolution effectiveness.

Outsourcing and Third-Party Charter

BIL's outsourcing providers are governed by the Outsourcing and Third-Party Charter.

Scope: The Charters and Policies apply to all entities.

Governance: The Charters and Policies are approved by the administrative, management and supervisory bodies.

Key content/principles: The purpose of this Charter is to set out the general principles that apply to outsourcing and the roles and responsibilities of the various stakeholders. These general principles, roles and responsibilities are further detailed in BIL Group Cloud Computing Policy, the Third Party Policy and all Risk and BIL Group purchases policies.

Public availability: They are made available to all internal stakeholders through the Bank's intranet.

BIL Group Disciplinary Investigation Unit Policy

The BIL Group Disciplinary Investigation Unit Policy outlines the procedures and processes in the event of a disciplinary incident.

Scope: The policy covers BIL Group employees.

Governance: A Disciplinary Investigation Unit, mandated by the Management Board, has been set up to ensure that disciplinary measures taken against employees for fraud, significant non-compliance with internal policies and procedures, and serious behavioural misconduct are fair and balanced.

Key content/principles: The objective is to ensure a consistent and thorough approach to investigating any allegation or indicator of fraudulent activities or serious misconducts in BIL Group. The Unit has the duty to protect the legal, financial and reputational interests of the BIL Group and to implement effective measures against internal fraud and any other illegal activities affecting the Bank's interests.

Public availability: The policy is made available to all via the Bank's intranet.

Additional Supporting Policies

BIL has several other supporting policies that complement its business conduct framework:

• Policy – Third Party Security
• Policy – Physical and Environmental Security
• Policy – Car Park Management
• Procedure – Emergency Evacuation
• Procedure – Security in Agencies
• Procedure – Physical Access and Protection
• Procedure – Client and Visitor Movement
• Health and Safety Procedures (summary for BIL LU employees)
• General Safety and Health Rules (GSSR) (summary for external service providers)
• Supplier Code of Conduct
• Market Abuse Prevention Charter
• BIL Group Remuneration Charter
• BIL Group Corporate Governance Charter
• Personal Data Protection Charter
• BIL Group Compliance Charter
• MiFID - Financial Promotion and Marketing Communication Policy
• MiFID Inducements Policy
• Safeguarding of Clients' Assets Policy
• Record Keeping Policy
• Employee Retention Policy
• Regulatory and Mandatory Trainings Policy

These policies work together to establish a comprehensive governance framework that ensures accountability and adherence to ethical standards throughout the organisation.

Incidents of corruption or bribery

Confirmed incidents

Banque Internationale à Luxembourg (BIL) reported zero confirmed incidents of corruption or bribery during the 2024 reporting period.

Convictions and fines

The Bank reported:

• No convictions for violation of anti-corruption and anti-bribery laws
• No fines paid for violation of anti-corruption and anti-bribery laws

Disciplinary actions

The Bank reported zero confirmed incidents in which employees were dismissed or disciplined due to corruption or bribery.

Contracts terminated

The Bank reported zero confirmed incidents relating to business partners where contracts were terminated or not renewed due to violations related to corruption or bribery.

Summary table

Scope: BIL Group

Investigation and reporting procedures

BIL has established comprehensive processes for preventing, detecting, and addressing corruption and bribery through:

• Whistleblowing Charter: Provides internal reporting channels where employees can confidentially report suspected wrongdoing or reprehensible acts to the "Designated Person" (Chief Compliance Officer). Reports can be made in writing, orally, or through in-person meetings. The Bank guarantees protection from retaliation for whistleblowers who report in good faith.

• Disciplinary Investigation Unit: Mandated by the Management Board to ensure fair and balanced disciplinary measures for fraud, significant non-compliance, and serious misconduct. The Unit protects the legal, financial and reputational interests of BIL Group and implements effective measures against internal fraud.

• Compliance Incident Committee: Operates independently from the management chain to objectively investigate potential suspicious cases. The committee determines whether reports should be made to the Financial Intelligence Unit (FIU).

• Governance and reporting: Statistical data regarding incidents and investigations are presented annually to the Audit Risk and Compliance Committee (ARCC), with reports escalated to the Board of Directors. Ad-hoc reporting occurs as necessary.

The Bank explicitly states: "There were no breaches to the anti-bribery and anti-corruption procedures and standards in 2024."

Payment practices

BIL Luxembourg's standard payment term for processing supplier invoices is up to 30 days. This timeframe encompasses the entire process, including the receipt of the invoice, dispatch to external service provider for scanning, approval by the official signatory, and the final payment.

Payment practices metrics

Payment performance

Currently, 99.7% of payments are made within the 30-day standard payment period, demonstrating BIL's commitment to timely payments and fostering strong relationships with its suppliers.

Legal proceedings

BIL had no legal proceedings on outstanding late payments in 2024 and does not currently have any legal proceedings ongoing.

Payment process controls

BIL focuses on timely payments of invoices. After the Contracts and Invoicing team enters an invoice, it is sent for validation to the Content Approver and Official Signature. To prevent late payments, the Bank has established clear timelines for processing. If an invoice is not validated within the specified timeframe, the Asset Manager (invoicing software) will send up to two reminders to the responsible parties, to ensure accountability.

Sampling methodology

The average number of days taken to pay an invoice has been determined through representative sampling to ensure that all invoices received are treated consistently, regardless of the supplier or supplier category in order to maintain fairness and transparency in the Bank's payment practices.