KomerÄnà banka as

The role of the administrative, management and supervisory bodies

Board composition and structure

Komerční banka operates a two-tier management system with separation of executive and control functions:

Board of Directors:

• Consists of 6 members, natural persons
• Elected for 4-year terms by absolute majority of Supervisory Board members
• Members elected at recommendation of Nominations Committee
• As of 31 December 2024: Jan Juchelka (Chairman), Didier Colin, David Formánek, Jitka Haubová, Miroslav Hiršl, Margus Simson
• Gender composition: 16.7% women (1 of 6 members)
• Multi-national composition: citizens of three countries

Supervisory Board:

• Consists of 9 members
• One-third (3 members) are employee representatives: Miroslav Hájek, Ondřej Kudrna, Sylva Kynychová (elected with effect from 15 January 2023)
• Three members are independent: Petr Dvořák, Petra Wendelová, Marie Doucet
• Gender composition: 55.6% women (5 of 9 members)
• Independent members meet SEC requirements and EBA/GL/2021/06 independence criteria

Diversity policy

The Bank applies a diversity policy as signatory to the Diversity Charter. The Supervisory Board ensures both governing bodies consist of persons meeting appropriate professional, time-related and other requirements.

Diversity assessment criteria:

• Experience, education, qualifications, profession, social position
• Gender, nationality, age
• Cultural environment

Target representation:

• 40% representation of under-represented gender in Supervisory Board
• Current achievement: 55.6% women in Supervisory Board (exceeds target)
• In case of equal candidate profiles, preference given to under-represented gender

Age requirements:

• Candidate age for Supervisory Board membership should not exceed 70 years
• Members should not serve on same company's supervisory board for more than 12 years

Committees with sustainability oversight

Supervisory Board Committees:

1. Audit Committee

   • Members elected by General Meeting
   • Majority of members, including Chairperson, are independent and professionally qualified
   • Supervises effectiveness of risk management systems (together with Risk Committee)
   • Oversees sustainability report assurance

2. Risk Committee

   • Monitors Bank's approach to risk, strategy in risk area
   • Monitors accepted levels of risk and risk management

3. Nominations Committee

   • Considers suitability of members of Bank's bodies
   • Reviews composition of bodies
   • Ensures compliance with ethical principles and rules
   • Evaluates trustworthiness, professional competence and experience of individual members annually
   • Adopted Principles of Suitability for Supervisory Board and Board of Directors

4. Remuneration Committee

   • Prepares proposals for remuneration decisions
   • Addresses issues affecting risk and risk management

Other committees:

• Enterprise Risk Committee (ERC): Reviews Risk Appetite Statement (RAS) indicators quarterly; most recent RAS validation performed November 2024
• Compliance Committee: Became direct committee of Board of Directors since 4 September 2023; approves basic internal policies relating to compliance risk; shares information on current compliance risks
• Operational Risk Committee: Determines overall strategy for operational risk management

Sustainability-related expertise and training

Board of Directors training (2024):

• Risk management
• Sustainability
• Anti-money laundering and preventing financing of terrorism
• International sanctions and ethics
• Creating inclusive working environment
• Compliance with Code of Conduct
• Legal aspects of service of elected body member
• New global internal audit standards

All employees training (mandatory):

• Workplace safety
• Fire safety
• Compliance and Ethical Code
• Risk management culture
• Safety minimum
• Internal policies
• Anti-money laundering

Exposed staff training:

• Fight against corruption (online, 45 min): once in 3 years for all functions
• Whistleblowing for managers and whistleblowing reports managers (online, 90 min): once a year for managers and risk functions
• Fight against corruption for most exposed people (online, 120 min): once in 2 years for risk functions
• Fight against corruption (offline, 90 min): one-off training

2024 training participation:

Frequency of sustainability discussions

The Board of Directors is regularly informed about:

• Development of risks incurred (reported to Supervisory Board, Board of Directors, Enterprise Risk Committee, Société Générale, and external supervisory authorities)
• ESG activities and strategy implementation
• Compliance with sustainability commitments

The Board of Directors:

• Approves KB's cybersecurity strategy annually
• Receives quarterly reports on whistleblowing alerts at Compliance Committee
• Reviews semi-annual ICAAP and annual ILAAP stress-testing activities (2024)

Specific roles assigned

Board of Directors responsibilities by member:

• Jan Juchelka (Chairman & CEO): Overall management, strategic direction; President of Czech Banking Association; President of Alliance for an Emission-Free Future
• Didier Colin: Chief Risk Officer and Chief Compliance Officer (CRO&CCO); independent of other top managers; has access to Supervisory Board; oversees risk and compliance management functions in subsidiaries; responsible for LoD2 activities for all types of risks
• Jitka Haubová: Responsible for operations, innovation, sustainability agenda coordination; Chairwoman of Nadace KB Supervisory Board; President of International Chamber of Commerce in Czech Republic; Member of ICC Executive Board
• David Formánek: Corporate and investment banking
• Miroslav Hiršl: Retail banking
• Margus Simson: Information technology

LoD1 perspectives (other Board members):

• Member responsible for retail banking: supervises LoD1 risk management related to retail activities
• Structural and business risks: managed within Strategy and Finance arm
• Legal risk: managed within organizational structure under Chief Operating Officer
• Strategic risk: managed directly by Board of Directors

Sustainability governance:

• Jitka Haubová responsible for sustainability agenda and its coordination within KB
• Security Center of Expertise defines overall cyber and information security governance under Chief Digital Officer
• Compliance Department responsible for establishing rules against corruption and prevention of bribery

Independence and effectiveness arrangements

Independence of control functions:

• Risk management and compliance functions independent of commercial and operational functions
• Independent from internal audit function
• Chief Risk Officer & Chief Compliance Officer is Board member independent of other top managers
• Direct access of CRO&CCO to Supervisory Board

Three lines of defence:

1. First line of defence (LoD1): Business units, tribes and support services responsible for daily risk management
2. Second line of defence (LoD2): Risk Management Arm and Compliance Arm ensuring independent risk and compliance management and control
3. Third line of defence (LoD3): Independent Internal Audit Arm

Internal Audit:

• Headed by Chief Executive Officer of KB
• Regularly reports to Audit Committee
• Conducts regular risk assessments annually
• Assessed Bank's internal control system as effective in 2024
• Carried out 42 audit missions in 2024 (13 exclusively at subsidiaries)
• 142 audit mission findings implemented in KB Group during 2024

Independent Supervisory Board members:

• Three independent members (Petr Dvořák, Petra Wendelová, Marie Doucet)
• Meet requirements set by U.S. Securities and Exchange Commission (SEC)
• Considered independent financial experts
• Independence based on Commission Recommendation 2005/162/EC Annex II
• Sign statutory declaration confirming independence (Audit Committee members)

Conflict of interest rules:

• Board members subject to stricter rules than Act No. 90/2012 Coll. requires
• Obliged to inform Board and Supervisory Board of any existing or potential conflicts
• Must abstain from voting on matters concerning relationships with other legal entities where they hold functions
• General Meeting can suspend service of elected body member in case of conflict of interest

Performance assessment:

• Regular assessment of all employees includes mandatory Code of Conduct compliance
• Key Performance Indicators include at least one risk indicator for top management and specified employees with material impact on risk profile
• Risk indicators must have at least 20% weight in overall assessment
• Branch network employees participating in credit process assessed on risk performance of loans granted
• Customer satisfaction taken into account for variable remuneration
• Infringement of compliance rule may result in 10% to 100% decrease in variable remuneration

Appointments Committee oversight:

• Since 2022, oversight and assessment of issues related to ethical conduct, including identified compliance incidents
• Regular basis evaluation by Appointments Committee of Supervisory Board

Information and reporting:

• Board of Directors periodically provides Supervisory Board with information on implementing changes and relevant facts
• Management and control information shared with employees via operational reports and training
• Quarterly reporting of all client complaints as part of Group reporting system and to Compliance Committee
• Compliance Department evaluates complaints resolution process at least once in 3 years

Integration of sustainability-related performance in incentive schemes

Roles covered

Sustainability-related performance is integrated into incentive schemes for:

• CEO: The variable remuneration component considers the area of sustainable development. One of the KPIs focuses on ESG (Implementation of strategic priorities, including sustainable development priorities) and is further divided into sub-goals such as increasing sales of sustainable products, reducing KB's carbon footprint, improving international ratings, increasing the number of employees involved in volunteering, or increasing the number of employees trained in sustainability. For the year 2024, sustainable development goals were given 5% of total KPIs weight for the CEO.

• Board members: For the year 2024, sustainable development goals were given 10% of total KPIs weight for the board member responsible for fulfilling sustainable goals, and 5% for other board members.

• All board members and senior management: In 2024, sustainable development goals measured through the COKR (Company Objectives and Key Results) system were included into the objectives of the CEO, all board members, and senior management. This involved a total of 2,321 Bank employees. The weight of these goals typically ranged from 5% to 50%.

A member of the Bank's board of directors is responsible for the sustainability agenda. The Bank's management is regularly informed about ESG-related activities, including the achievement of set sustainability targets.

Specific sustainability KPIs tied to remuneration

The ESG KPI focuses on Implementation of strategic priorities, including sustainable development priorities and is further divided into sub-goals:

• Increasing sales of sustainable products
• Reducing KB's carbon footprint
• Improving international ratings
• Increasing the number of employees involved in volunteering
• Increasing the number of employees trained in sustainability

Weighting (% of STI / LTI tied to sustainability)

For 2024:

• Board member responsible for fulfilling sustainable goals: 10% of total KPIs weight
• CEO: 5% of total KPIs weight
• Other board members: 5% of total KPIs weight
• All board members and senior management (2,321 employees): typically ranged from 5% to 50% of objectives weight

Performance period and target structure

• Annual evaluation of KPI results is conducted in the first quarter of the calendar year following the evaluation period.
• The Supervisory Board of KB approves the key performance indicators for the given business year.
• Financial and non-financial KPIs each have their weights expressed as percentages. The total of financial and non-financial KPIs equals 100%.
• The Supervisory Board of KB, upon receiving recommendations from the Remuneration Committee, has the authority to set individual KPIs, including their weights, both financial and non-financial, for the following fiscal period.

Linked to STI or LTI or both

The variable component of remuneration is primarily linked to annual bonuses (STI):

• The variable component of the remuneration for a member of the KB Board of Directors is paid in the form of annual bonuses.
• This part of the remuneration is based on the fulfilment of Key Performance Indicators (KPIs) both financial and non-financial in nature.

LTI component:

• The variable component of the board members' remuneration is subject to deferred bonus rules in accordance with the European Capital Requirements Directive (CRD IV as amended) and its transposition into Czech law by CNB Decree No. 163/2014 Coll., as amended.
• The minimum period for which the variable component of the board members' remuneration is deferred is 6 years from the date the variable component was awarded. This period includes 5 years of deferral and 1 year of retention of non-cash instruments.
• The deferred and retained portions of remuneration motivate employees to maintain performance sustainability in the long term and constitute at least 70% of the variable component of remuneration.
• In the case of exceptionally high variable remuneration (i.e. remuneration exceeding 100% of the fixed component or an amount of EUR 300,000), the deferred and retained portion constitutes at least 80% of the variable component.

KB Group also provides some key employees with SG shares for free under the LTI (Long-Term Incentives) programme. The rights to the shares in this programme are subject to a 3-year lock-up period and the condition of positive financial results for Société Générale Group. In 2024, the programme included 346 KB Group employees with a total value of CZK 30,577,910.

How threshold/target/maximum performance is defined

• Each indicator has its target value in accordance with the KB Group's business plan and threshold values for fulfilment.

• The performance scale for evaluating KPIs is as follows for most KPIs:

  • Achieving the expected target for the year corresponds to 100% of the KPI target weight
  • Maximum fulfilment corresponds to up to 120% of the KPI target weight
  • Threshold fulfilment corresponds to 50% of the KPI target weight
  • Values below the threshold fulfilment correspond to 0% of the KPI target weight

• Each KPI has a defined fulfilment interval.

• The Supervisory Board is responsible for evaluating the KPIs based on the recommendations of the Remuneration Committee.

• If the target is met, the board members are entitled to remuneration proportional to the percentage allocated for that specific goal to each individual board member.

• In the event of a target not being met, this impacts the board members' remuneration, as the percentage allocated for the target fulfilment is either not paid out or is reduced in accordance with the level of target fulfilment.

• The maximum variable remuneration for a board member for a given year must not exceed 200% of the fixed remuneration for that year, as decided by the General Meeting.

Disclosure of payout against sustainability KPIs in the reporting period

The document does not provide specific disclosure of actual payout amounts against sustainability KPIs for the 2024 reporting period. It states that:

• Annual evaluation of KPI results is conducted in the first quarter of the calendar year following the evaluation period.
• The supporting documentation is prepared by designated employees from the KB Strategy and Finance department, who compare the actual KPI fulfilment against the planned KPI fulfilment.

However, specific payout figures or achievement percentages for sustainability KPIs are not disclosed in the excerpts provided.

Additional information

• The same basic principles set at the KB level are applied proportionally to remuneration at the subsidiaries.
• Sustainable development goals, including climate change mitigation goals, are part of the Bank's 2020–2025 strategic plan and, like the implementation of other strategic priorities, are measured using the Company Objectives and Key Results (COKR) system.
• The final COKR performance is calibrated by the Executive Committee based on the success score.
• The fulfilment of key performance indicators and the achievement of strategic goals (COKR) are updated quarterly and transparently communicated to the company's management.
• A clawback principle is applied throughout the bonus deferral and retention period. The clawback principle is applied in particular if the identified employee contributed significantly to negative financial results of the Bank, in cases of fraudulent behaviour, or if the employee acted with gross negligence resulting in substantial losses. This clawback can be pursued for up to 6 years from awarding the variable component.
• The evaluation of employees holding internal control functions (particularly Risk Management, Compliance, and Internal Audit) is tied to the achievement of goals associated with their functions, independently of the performance of the Bank's areas of activity they oversee.
• The principles of compensation for employees who significantly influence the Bank's risk profile are reviewed annually and evaluated by internal audit employees.
• The Supervisory Board of KB, through its Compensation Committee, oversees, evaluates, and monitors compliance with the principles and procedures of compensating employee whose activities substantially impact the Bank's overall risk profile.
• The compensation policy and practices must be documented and verifiable for at least 5 years.

Business model and client service organisation

Business model As a leading Czech bank, Komerční banka's has centred its business model around providing a wide range of financial services to individual, business, public sector, and institutional clients. Its core activities include retail, corporate, and investment banking.

Komerční banka is the parent company and main component of KB Group. Its subsidiaries contribute with their know-how and capacities in specific areas of the financial markets. The Group enhances its offer to clients in co-operation with external services providers, either in commercial partnerships or by acquiring ownership participations.

Komerční banka Group is active on the financial market in Czechia. Through its branch as well as via the activities of some subsidiaries, it is present also in Slovakia.

Inputs and resource management The main inputs to Komerční banka's business model are financial capital inclusive of liquidity; human capital represented by the skills, knowledge, and commitment of the staff; as well as intellectual capital in the forms of accumulated expertise and an advanced technology base. Other resources critical for the successful operation of KB Group's business are capital in the form of relationships with customers and other stakeholders, which implies responsibility in relation to the communities and the social and economic environment within which the Group operates. KB Group is dependent also on the natural environment and uses a range of natural resources. It is committed to contributing to the protection of the environment.

Key approaches to securing and developing these inputs include maintaining strong relationships with clients, regulators, investors, and communities; fostering a positive work environment and developing talent; collecting and analysing data; managing risks; developing technology and innovation; adhering to compliance and governance standards and best practices; and integrating ESG criteria into decision-making processes.

Outputs and benefits of the Group's activities for clients, investors, and other stakeholders The main benefits of KB Group's activities for customers include access to financial services. Clients benefit from a wide range of financial products and services, including payment, saving and investment solutions, mortgages, and other loans. Furthermore, clients receive financial advice and support from experienced professionals, helping them make informed decisions and achieve their financial goals.

KB is a universal bank with a multi-channel distribution model. Its business model is founded upon building long‑term relationships with customers and offering relevant solutions for situations occurring during clients' lives. KB's investment in digital banking and innovative technologies provides customers with effective, secure, and user-friendly banking services.

The business strategy focuses on reinforcing or achieving market‑leading customer satisfaction status in the target client segments. KB differentiates itself in the market by best-in-class advisory, a relevant and comprehensive product offer leveraging the global scale of the Komerční banka and Société Générale groups, and a highly effective model of servicing clients.

The services provided by subsidiaries include housing loans and building savings (Modrá pyramida), pension savings (Penzijní společnost KB), consumer financing (ESSOX), life and property insurance (Komerční pojišťovna), financing of equipment and technologies (SGEF), and factoring (Factoring KB). Another Komerční banka subsidiary, KB Smart Solutions, administers the Group's participations in several companies mainly from the fintech sector, such as upvest, Finbricks and ENVIROS.

Investors benefit from KB's prudent financial and risk management, which aims to protect their capital, provide a fair and attractive return on their investment, and ensure the long-term stability and resilience of the Group.

KB's commitment to transparent reporting and compliance with regulatory standards ensures that investors have access to accurate and timely information on the Group's performance and sustainability initiatives.

KB Group's activities contribute to economic development by financing businesses and individuals' private projects, supporting job creation, and promoting entrepreneurship and innovation.

The Group's adherence to regulatory requirements and ethical standards ensures that it operates responsibly, supports financial stability, and maintains the trust of regulators, customers, and the public.

KB's commitment to sustainable finance and environmental conservation helps mitigate climate change and promotes the transition to a low-carbon economy.

The human resources management practices applied across KB Group contribute to a fulfilling and supportive work environment, enabling employees to thrive both personally and professionally.

Through corporate social responsibility (CSR) initiatives, the Bank supports numerous activities, including environmental protection, disadvantaged families and children, palliative care, and other social programs that benefit society.

Interests and views of stakeholders

Identified key stakeholder groups

The views and interests of stakeholders are taken into account when setting the strategy, business model, and direction of KB Group in the area of sustainability. Regular dialogue is maintained with stakeholders representing the following groups:

• corporate clients, municipalities and the public sector, retail clients;
• shareholders;
• employees and other workers;
• business partners, including suppliers;
• financial markets, including rating agencies;
• the public, including future generations; and
• regulatory bodies, including the Czech Banking Association (CBA).

Stakeholder engagement

The following table details the communication and engagement methods for each stakeholder group:

Key concerns and views raised by stakeholders

The disclosure details engagement frequency and methods:

• Retail and corporate clients: Regular client surveys in the form of questionnaires or focus groups; satisfaction surveys with individual service channels (branch, contact centre, digital channels) and feedback. Similarly, we measure satisfaction at different parts of the customer journey, from the purchase of a product to long-term satisfaction. Clients typically complete questionnaires online.
• Employees: Annual employee satisfaction survey. In addition to the overall level of satisfaction, KB Group also monitors and evaluates the results of individual questions that are the subject of these surveys.
• Supply chain: Regular meetings with supplier representatives, tenders. KB Group organises regular meetings with suppliers on a quarterly or yearly basis at the level of the contracting authority to discuss mutual co-operation. At the same time, regular tenders are held (usually after 3 years), where co-operation is also discussed.
• Shareholders: Use of information obtained at general meetings.
• Rating agencies: Regular meetings on an annual basis.
• Regulatory body: Use of findings from potential inspections.

Integration into strategy and business model

The views and interests of stakeholders are incorporated into KB Group's processes at various stages, such as during preparation of the strategy, which is set for a 5-year period, and during the identification of material topics within the double materiality assessment, which is updated on an annual basis.

As part of the KB2025 strategic plan, one of the goals is to reach 2 million clients. To retain these clients, it is important that they be satisfied with the products and services offered, and this depends in large measure upon employees in the branch network.

KB Group regularly conducts surveys among its employees, retail clients, and corporate clients. Regular (quarterly or annual) meetings and discussions are held with suppliers to discuss mutual co-operation. Additionally, regular tenders are conducted, usually every 3 years, where mutual co-operation is discussed again. The Group ensures equal treatment and fair conditions in dealings with all suppliers.

KB also considers opinions gathered from shareholders, rating agencies, and any findings from regulators. Feedback is obtained through communication with these groups, such as during regular meetings with rating agencies, and with shareholders at general meetings.

The results of these surveys and dialogues with stakeholders are regularly presented to KB Group's management.

The strategy for the years 2026 to 2030 is currently being prepared while taking into account feedback from stakeholders. The Bank does not anticipate any significant changes in relationships with stakeholders in the upcoming period. Inasmuch as stakeholders' opinions are continuously considered, no major changes in the current strategy or business model are planned until 2025, the end of the current strategic period. Stakeholders were also involved in assessing material topics, and the results were validated with them to ensure sufficient stakeholder awareness.

Strategic planning process

Every year, KB is part of a strategic planning process with Société Générale, which focuses on:

• business and environmental context (competitive environment, market position, trends, financial/non-financial indicators, regulation, BES, customer satisfaction, etc.);
• medium- and long-term plan, including a description of organic or inorganic growth.

Feedback from shareholders, the audit, or the CNB and ECB is continuously evaluated and incorporated into the strategic planning and management process.

KB evaluates the fulfilment of the objectives of the KB2025 strategy and is part of the strategic planning for the period 2026–2030.

Distinction between affected stakeholders and users of sustainability information

The disclosure explicitly categorizes stakeholders:

Affected stakeholders:

• Individual clients (consumers)
• Corporate clients and corporations, including municipalities
• Shareholders
• The public, including future generations
• Employees and other workers
• Business partners, including suppliers

Users of sustainability statements:

• Financial markets, including credit rating agencies and bond investors
• Regulatory authorities, including the Czech Banking Association (CBA)

Material impacts, risks and opportunities and their interaction with strategy and business model

Overview

KB Group conducted its first double materiality assessment in 2024 in accordance with CSRD requirements. The assessment identified material impacts, risks and opportunities (IROs) across KB Group's own operations and value chain, considering short-term (up to 1 year), medium-term (1 to 5 years) and long-term (over 5 years) time horizons.

In total, 58 material impacts, risks, and opportunities were identified and grouped into 36 sub-topics and sub-sub-topics under 4 major topics:

• Climate Change (E1)
• Own Workforce (S1)
• Consumers and End Users (S4)
• Business Conduct (G1)

Double materiality assessment process

The double materiality assessment was performed in four steps:

1. Understanding the context
2. Identifying impacts, risks, and opportunities (IROs) related to sustainability topics
3. Evaluating those impacts, risks, and opportunities
4. Identifying material topics

Perimeter: The assessment included Komerční banka and six subsidiaries: Modrá pyramida stavební spořitelna a.s., KB Penzijní společnost a.s., SG Equipment Finance Czech Republic s.r.o., ESSOX s.r.o., Factoring KB a.s., and KB SmartSolutions s.r.o.

Stakeholders involved: Internal expert groups representing retail clients, corporate clients, municipalities, shareholders, financial markets, regulatory bodies, employees, and business partners. External validation involved selected suppliers, retail and corporate clients, trade union representatives, Société Générale as largest shareholder, and employees.

Materiality threshold: Set at 2.5. Impacts were assessed on scales of 0-4 for scope, scale, likelihood, and remediation. Risks and opportunities were assessed for potential financial effects and likelihood.

Total IROs identified: 519 material impacts, risks, and opportunities were identified within KB Group and assessed by internal stakeholder representatives.

List of material impacts, risks and opportunities

E1 Climate change

Climate change mitigation

Climate change adaptation

Energy

S1 Own workforce

Working conditions

Equal treatment and opportunities for all

Other work-related rights

S4 Consumers and end-users

Information-related impacts for consumers and/or end-users

Social inclusion of consumers and/or end-users

Personal safety of consumers and/or end-users

G1 Business conduct

Business conduct

Linkage between IROs and strategy / business model

KB Group's ESG strategy is based on a materiality assessment that identifies the ESG factors most important to the Group's stakeholders, as well as for the Group's growth and risk outlook. KB's ESG strategy is fully aligned with the purpose, mission, and overall strategy of KB as formulated in the KB2025 plan.

In identifying material impacts, risks, and opportunities, KB Group based its approach on its strategy and established business model. The analysis of internal and external documents included the KB2025 Strategic Plan, the ESG Strategy and targets, the Business Model, and the Business Environment Scan.

KB Group has the potential to help combat climate change and transition to a carbon-neutral society primarily through financing responsible activities and sustainable solutions for its clients. The Group is continuously expanding its range of products and services that contribute to achieving these goals, including:

• Responsible investing
• Loans for sustainable housing
• Mortgages for sustainable housing
• Financing of electromobility
• ESG and grant advisory

KB Group does not operate in the fossil fuel industry, production of chemicals, controversial weapons, or tobacco cultivation. The Group has no revenue from these sectors, except in cases of financing some of these areas (e.g. the fossil fuel industry or chemical production).

How material IROs interact with the business

KB Group perceives the identified positive impacts primarily in its activities aimed at financing sustainable projects and technologies that can have influence on mitigating negative impacts, such as impacts of energy production on the environment. KB Group has set policies to stop financing certain activities (e.g. the coal industry).

In terms of negative impacts, KB Group perceives the biggest problem in the fact that it provides non-purpose loans, which a client can use for environmentally unfriendly activities and thus affect people's lives. This could, for example, mean using the loan to renovate a home with a low energy label, heat with fossil fuels, buy a car with an internal combustion engine, or use environmentally unfriendly fertilisers in agricultural production.

KB Group currently has no financial impact from material risks and opportunities that would have a material impact on its financial position, financial performance, and cash flows, nor are there any material risks or opportunities that would require significant adjustment to the carrying amounts of assets and liabilities in the reporting period.

Resilience to identified IROs

KB Group does not have a full resilience analysis at this time, but, in light of risks associated with climate change, KB Group has conducted a detailed resilience analysis of its business model, the output of which is the Business Environment Scan (BES).

Physical risk: The vulnerability of the Czech Republic to physical risk is currently considered one of the lowest in Europe. Despite the increase in extreme weather events, the Czech Republic exhibits low vulnerability to acute physical risk due to the small share of agriculture in GDP, the absence of coastal areas, and the low share of renewable water resources originating from abroad. Key physical risks are associated with more frequent river floods and uncontrolled fires, primarily impacting the agriculture and real estate sectors.

Transition risk: The Czech Republic is considered highly vulnerable to transition risk due to the significant share of black and brown coal in the energy mix.

The analysis looked at impacts, risks, and opportunities, mainly with a view to the medium and long terms, and it focused on the following segments:

• retail client portfolio
• corporate client portfolio
• investment banking
• subsidiary services

The analysis has shown that impacts and risks are limited due to the diversification of KB Group's portfolio and the positive impacts of cross-cutting business opportunities. These are seen particularly in financing, leasing, and comprehensive consultancy, both in-house and in collaboration with reputable partners. They also are supported by a large number of planned and existing EU and government subsidy programs focused on nature-friendly initiatives, the restructuring of polluting industries, and restoration of water-scarce areas or regions.

KB Group also regularly verifies the appropriateness of its strategy and business model through client and employee surveys, as well as communication with suppliers and other stakeholders. As part of these activities, it verifies that its strategic objectives and business model are in line with their expectations.

KB Group has a Business Continuity Management System document encompassing procedures for securing its business in the event of unexpected events that may be related to, among other things, physical risks.

Management of IROs

Responsibilities for monitoring individual material impacts, risks, and opportunities are outlined in the detailed overview tables. The driving force behind sustainability at Komerční banka is the CEO and Chairman of the Board of Directors, Jan Juchelka, with sponsorship by the board member and Chief Operations Officer responsible for the Bank's operations, Jitka Haubová.

KB Group is gradually enhancing its ability to collect, measure, and disclose ESG data to meet regulatory and other initiatives. The Group is also progressively incorporating ESG risks into its credit policies and risk management. Information on the development of ESG risk indicators, which are part of KB Group's Risk Appetite Statement, is regularly presented quarterly to the Enterprise Risk Committee (ERC).

ESG risks are taken into account in KB Group's control mechanisms and in key risk activities, such as regular risk identification, risk severity assessment, and stress testing. Oversight of ESG risk management is the responsibility of board members Jitka Haubová and Didier Colin.

KB Group has set up 3 lines of defence:

• LoD 1 (First Line of Defence): responsible for managing ESG risks on a daily basis
• LoD 2 (Second Line of Defence): defines risk rules and procedures for managing ESG risks, monitors key indicators, and evaluates the level of risks undertaken
• LoD 3 (Third Line of Defence): the Internal Audit Department independently verifies the correct implementation of regulatory requirements related to ESG

Due diligence in sustainability

KB Group conducts its business activities in accordance with due diligence in the area of sustainability. The basic elements of due diligence include:

a) Incorporating due diligence into governance, strategy, and business model: A member of the Bank's board of directors is responsible for the sustainability agenda. The Bank's management is regularly informed about ESG-related activities. The results of the double materiality assessment were approved by the Bank's board of directors.

b) Involvement of affected stakeholders: The views and interests of stakeholders are taken into account when setting the strategy, business model, and direction of KB Group in the area of sustainability. Regular dialogue is maintained with all key stakeholder groups.

c) Identification and assessment of adverse impacts: KB Group has a methodology that describes the processes for identifying and assessing material impacts, risks, and opportunities.

d) Adoption of measures to address adverse impacts: Material sustainability-related matters are incorporated into the strategy, during the setting of which KB Group also considers the measures and initiatives it intends to implement.

e) Monitoring and communicating the effectiveness: KB Group has set targets in the environmental and social areas, including indicators for achieving these targets, which are regularly monitored and evaluated.

Based on the results of the analysis of the material topics, there was no need to adjust the strategy or business model. This may be justified by KB Group's existing ESG strategy, from which policies, action plans, and sustainability targets were derived.

Description of the process to identify and assess material impacts, risks and opportunities

Methodology and Process Overview

KB Group conducted a double materiality assessment in 2024 as required by the CSRD legislation. The process identifies material impacts, risks, and opportunities (IROs) that KB Group has or may have in relation to environmental, social, and/or business conduct matters.

The double materiality assessment was performed in four steps:

1. Understanding the context
2. Identifying impacts, risks, and opportunities (IROs) related to sustainability topics
3. Evaluating those impacts, risks, and opportunities
4. Identifying material topics

The methodology is based on the requirements of the CSRD legislation, particularly Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 and the Value Chain Implementation Directive.

Step 1: Understanding the Context

An analysis of internal and external documents and sources was carried out. Internal documents included:

• KB2025 Strategic Plan
• ESG Strategy and ESG targets
• Business Model
• Business Environment Scan (analysis of the impact of climate and environmental risks on KB Group's business environment)
• Results of employee and client surveys
• Analysis of the corporate loan portfolio
• Risk Appetite Statement
• Previous experience in identifying material topics for the Sustainability Report

External sources included:

• Materials and analyses of international organisations (Principles of Responsible Banking, World Economic Forum – Global Risk Report 2024, UNEP FI – Impact Radar, OECD Guidelines for Multinational Enterprise)
• Conclusions from discussions at the Czech Banking Association
• Analysis of non-financial reports on the Czech and European markets

Value Chain Mapping:

In identifying the value chain, KB Group focused on:

• Upstream – suppliers of services and products that are key to KB Group's operations (IT services, telecommunication services, production of payment cards, office supplies, energy, water, marketing services)
• Own operations – products and services provided by KB Group (purpose and non-purpose loans, investments, credit cards, etc.), including distribution channels and business conducted in office buildings
• Downstream – clients and the communities concerned which KB Group is able to influence, both positively and negatively, through financing and co-operation

Perimeter Identification:

The following KB Group subsidiaries were included in the double materiality process:

• Modrá pyramida stavební spořitelna, a.s.
• KB Penzijní společnost, a.s.
• SG Equipment Finance Czech Republic, s.r.o.
• ESSOX, s.r.o.
• Factoring KB, a.s.
• KB SmartSolutions, s.r.o.

Step 2: Identifying Impacts, Risks, and Opportunities

Identification of Sustainability Topics:

KB Group included all sub-topics prescribed by ESRS 1, Annex A, AR 16 while also taking into account other sustainability topics based on previous assessments, existing non-financial reporting, and other data sources and sector policies (SASB, GRI, and OECD Guidelines).

The list of topics was supplemented by KB Group-specific topics:

• Financial education
• Digitalisation
• Management of the legal and regulatory framework
• Systemic risk management
• Business model resilience
• Financial crime

Expert Group Involvement:

The process involved expert groups of KB Group employees with long-term experience in areas subject to the double materiality process, including:

• Risk Management department experts
• Human Resources department experts
• Compliance department experts
• Experts interacting with the supply chain
• Experts working long-term with clients (both corporate and retail)

A total of 51 staff experts participated. Forms were prepared for each stakeholder group, and interviews were conducted with members of each internal expert group.

Identification in Subsidiaries:

Representatives of subsidiaries identified for inclusion completed a list of identified IROs and then completed a questionnaire that simplified the double materiality assessment at KB's parent company.

Time Horizons:

KB Group set the following time horizons:

• Short-term horizon – up to 1 year
• Medium-term horizon – from 1 to 5 years
• Long-term horizon – over 5 years

Expert group representatives had to identify time horizons for each identified impact, risk, or opportunity and determine whether the IRO arises within the business itself or in the upstream or downstream of the value chain.

Total IROs Identified:

In total, 519 material impacts, risks, and opportunities were identified within KB Group and were assessed by internal stakeholder representatives based on predefined parameters.

Step 3: Assessment of Impacts, Risks, and Opportunities

Scoring Criteria for Impact Materiality:

The identified impacts were assessed in terms of:

• Scope – ranging from 0 (none) to 4 (absolute)
• Scale – ranging from 0 (none) to 4 (global)
• Likelihood – ranging from 0 (unlikely) to 4 (certain)
• Remediation – for negative impacts only – ranging from 0 (easily remedied within 6 months) to 4 (irremediable)

Scoring Criteria for Financial Materiality:

For risks and opportunities identified, their potential financial effects and likelihoods were assessed. The rating scales were set from 0 to 4, with a qualitative description of each value set separately for risks and opportunities.

Five selected representatives of Komerční banka's management participated in the financial materiality assessment. Each of the five nominated bank management representatives assessed the identified risks and opportunities. KB Group views ESG risk not in isolation but as part of other risks (credit risk, operational and market risk, liquidity risk, and reputational risk).

Threshold for Materiality:

The threshold for determining the materiality of the identified impacts, risks, and opportunities has been set at 2.5. All identified opportunities and risks were scored using the scales set and risks and opportunities above the threshold were classified as material.

Linkages Between IROs:

The analysis of impacts was carried out by identifying for each impact whether the impact might entail a risk or an opportunity.

Step 4: Identification of Material Topics

Impacts, risks, and opportunities that exceeded the established threshold of 2.5 were assessed as material topics and determined the scope of the reporting requirements for disclosure under ESRS standards.

A check was made to ensure that all information required for the assessment was completed in full, including correct classification of each IRO as material or immaterial in accordance with the set threshold.

Validation Process:

The results were validated by:

1. Internal expert groups (impact and financial materiality assessors) and subsidiaries through a presentation at a joint meeting
2. External groups:
   • Selected suppliers, retail and corporate clients through email communication
   • The trade union organisation of Komerční banka, a.s. through a presentation at its meeting
   • The largest shareholder Société Générale in the form of an information document summarising the results and a description of the procedure
   • KB Group employees by means of information on the Intranet
3. Approval by the management of Komerční banka, a.s. in the form of a presentation at the Executive Committee and Board of Directors meetings

Final Results:

In total, 58 material impacts, risks, and opportunities were assessed as material. The material impacts, risks, and opportunities were grouped into:

• 36 sub-topics and sub-sub-topics
• 4 major topics: Climate Change, Own Workforce, Consumers and End Users, and Business Conduct

Inputs to the Assessment

The assessment utilized:

• ESRS standards and guidance (ESRS 1, Annex A, AR 16)
• Sector benchmarks (SASB, GRI standards)
• OECD Guidelines for Multinational Enterprise
• Principles of Responsible Banking
• UNEP FI – Impact Radar
• World Economic Forum – Global Risk Report 2024
• Czech Banking Association materials
• Internal experts from Risk Management, Human Resources, Compliance, supply chain, and client-facing departments (51 staff experts total)
• External validation through stakeholder consultation (retail clients, corporate clients, suppliers, Société Générale, trade union representatives, employees)
• Internal documents (KB2025 Strategic Plan, ESG Strategy, Business Model, Business Environment Scan, Risk Appetite Statement, employee and client surveys, corporate loan portfolio analysis)

Frequency and Review

The double materiality assessment process has been implemented for the first time in 2024. KB Group plans to update the double materiality assessment regularly on an annual basis.

The results of the double materiality assessment were presented to the members of the Executive Committee and, ultimately, approved by the Bank's Board of Directors.

The Bank's management will be informed of changes and developments in identified material impacts, risks, and opportunities during updates to the double materiality process. Material impacts, risks, and opportunities are part of the Annual Financial Report and are incorporated into the Bank's ESG strategy.

Management and Integration

The process of identifying, assessing, and managing impacts, risks, and opportunities is now integrated into the process of preparing the non-financial part of the annual report.

As the double materiality assessment process has been implemented for the first time in 2024, it will be integrated into existing corporate governance processes in the period ahead. Current market practice will be taken into account to ensure relevance and timeliness in light of legislative developments.

Responsibilities for monitoring individual material impacts, risks, and opportunities are outlined in the Material topics section. Mapping of identified material impacts, risks, and opportunities to policies is provided in the Policies section.

Transition plan for climate change mitigation

Scope and structure of the plan

KB Group does not have a separate document summarising the transition plan for climate change mitigation. The transition plan measures are part of the KB2025 Strategic Plan. The Group also follows sectoral policies set by the SG Group, which establish detailed environmental and social rules and standards for financing business activities and projects in sensitive sectors. SG Group's sectoral policies are publicly available on the Komerční banka and Société Générale websites. KB Group plans to focus on preparing information about the transition plan in the future, which would comply with the requirements of the CSRD directive.

Targets and alignment

For individual sectors, the parent company Société Générale sets targets in line with the Paris Agreement. KB Group has set partial targets for reducing carbon emissions derived from the SG Group's goals and commitments. KB Group currently does not have its own targets directly based on the 1.5°C warming scenario of the Paris Agreement.

In 2019, SG committed to aligning its business model with the goals of the Paris Agreement and pledged to stop financing coal-fired power plants. SG also committed to supporting clients in activities aligned with the Paris Agreement by providing at least EUR 120 billion in financing for the energy transition and sustainable development between 2019 and 2023, which has since been updated to EUR 300 billion. In 2021, SG, as a founding member of the UNEP-FI Net-Zero Banking Alliance, committed to proactively manage its financing portfolios to become compatible with the goals of the Paris Agreement.

Also in 2019, KB set a goal to reduce its exposure to clients with assets in coal mining or coal energy in EU and OECD countries by 2030 at the latest.

KB Group has set measures in line with the NZBA (Net-Zero Banking Alliance) commitment, focusing primarily on sectors with the highest carbon content – for example, to exit the coal industry by 2030 and SG Group's decarbonisation goals. These sectors are continuously monitored by KB to ensure it reduces investments in these areas. Methodologies are in place for monitoring and assessing individual transactions.

Komerční banka is not excluded from the EU benchmarks linked to the Paris Agreement.

Key decarbonization levers

Komerční banka recognises that its influence in combating climate change and transitioning to a carbon-neutral society is primarily through financing responsible activities and sustainable solutions for its clients. Therefore, it is continuously expanding its range of products and services that help achieve these goals.

The products that KB Group offers to its clients with the aim of reducing climate impact include:

• Photovoltaics
• Heat pumps
• Electric cars (electromobility)
• Insulation
• Greywater systems
• Reclamation of watercourses
• Circular economy
• Water conservation in industry and water retention in the landscape
• Projects with positive social impact (modernisation of healthcare facilities, healthcare, social care, and employment)

KB Group has the potential to help combat climate change and transition to a carbon-neutral society primarily through financing responsible activities and sustainable solutions for its clients. Products and services include:

• Responsible investing
• Loans for sustainable housing
• Mortgages for sustainable housing
• Financing of electromobility
• ESG and grant advisory

Locked-in emissions and stranded assets

KB Group has set targets to reduce greenhouse gas emissions in order to keep emissions from its own activities at a low level. In recent years, various measures have been implemented to reduce the Group's carbon footprint to the level of locked-in greenhouse gas emissions. These measures include energy management, the use of electric vehicles, and the option of flexible work from home.

Locked-in emissions also come from financial products and services that KB Group offers to its clients. Even though the Group does not offer energy-intensive products, these locked-in emissions are still significant. The loan portfolio is continuously monitored, and steps are taken to reduce its emission intensity to ensure that financed emissions do not jeopardise established greenhouse gas reduction targets. However, due to the lack of data within the financed portfolio, KB Group currently does not account for locked-in emissions from the products and services provided.

Business model resilience analysis

KB Group does not currently have a full-scale analysis of business model resilience as required by CSRD. Considering the risks associated with climate change, however, the Group has conducted a detailed analysis of its business model's resilience, resulting in an internal document entitled "Business Environment Scan".

The Business Environment Scan contains a description of the methodology used for the analysis, including the parameters considered. The analysis focused on all products provided by KB Group and considered all time horizons (i.e. short-, medium-, and long-term).

The analysis relied on various documents addressing climate change, such as the Climate Change Adaptation Strategy of the Czech Republic, the State Energy Policy of the Czech Republic, and other strategic documents in the energy sector, the National Energy and Climate Plan of the Czech Republic, and the Climate Change Adaptation Strategy Under Conditions of the Czech Republic.

In this analysis, KB Group considered both the threats related to climate change (physical risk) and transition risk, regarding which the Czech Republic was evaluated to be highly vulnerable.

Transition risk

For transition risk, KB Group considered the potential risk of transitioning the Czech economy, which is currently considered highly vulnerable to this type of risk, primarily due to the significant share of coal and lignite in its energy mix.

One of the scenarios for transition risk used the CCVI index (Corporate Climate Vulnerability Index), where simulation of a one-notch rating downgrade was conducted for selected exposures with an estimated impact on provisions. Additionally, potential impacts on clients related to legislative changes, such as changes in emission allowances, were considered.

To further minimise transition risk, SG Group (inclusive of KB Group) has set targets to reduce exposures in areas that could be significantly affected by legislative changes, such as the coal industry, automotive industry, and cement production. KB Group also monitors market developments, legislative changes, new environmental policies, and market surveys. ESG factors assessments are included, too, in risk management.

Although transition risk is perceived as significant within KB, the analyses suggest that, due to the sufficient diversity of KB's portfolio and established processes to minimise this risk, KB's portfolio is less vulnerable to transition risk compared to the transition risk of the Czech economy as a whole.

Physical risk

KB Group also examined how its assets and business activities are sensitive to physical risks. The vulnerability of the Czech Republic to physical risk is currently considered one of the lowest in Europe. Despite the increase in extreme weather events (frequent heavy rains, longer droughts, heatwaves, warmer and wetter winters), the Czech Republic exhibits low vulnerability to acute physical risk due to the small share of agriculture in GDP, the absence of coastal areas, and the low share of renewable water resources originating from abroad.

This is confirmed by the Sovereign Vulnerability Index prepared by the parent company, which rates the risk class for the Czech Republic as low, and the EU Inform Risk assessment, where the Czech Republic has one of the lowest risk ratings in the Hazard and Nature category within the EU. Key physical risks are associated with more frequent river floods and uncontrolled fires, primarily impacting the agriculture and real estate sectors.

In the case of physical risk, the analysis considered especially developments in weather patterns, such as more frequent heatwaves, extreme droughts, and floods.

The analysis concluded that, given the current distribution of the Group's portfolio and considering that the Czech Republic is regarded as low-risk in terms of physical risk within the EU, KB Group currently need not consider physical risk to be significant. Nevertheless, this risk will continue to be monitored due to changing climate conditions. Currently, the materialisation of physical risk in the Czech Republic could result in a slowing of GDP growth.

Monitoring and governance

Progress in fulfilling the KB2025 Strategic Plan is monitored through set goals, which are regularly reviewed and evaluated on a quarterly basis and presented to top management. KB Group's management is financially incentivised to achieve climate-related aspects by giving consideration to these targets.

The fulfilment of partial goals is in line with the business strategy, and the management of Komerční banka is informed about the progress of the established steps.

Policies related to climate change mitigation and adaptation

Komerční banka (KB) Group has established several policies addressing climate change mitigation and adaptation, organized by topic area:

Climate change mitigation

KB carbon footprint measurement

• Content: Describes the process for monitoring the company's own carbon footprint
• Monitoring: KB Group regularly monitors and evaluates targets, with top management informed quarterly

Data collection methodology for calculating the carbon footprint of KB

• Content: Describes the processes for incorporating the acquisition of ESG information when selecting suppliers

ESRM process – environmental and social risk management

• Content: Assesses clients and transactions from an ESG perspective
• Links to standards: Incorporates principles from the Equator Principles (EP), which KB has been applying since 2020. The ESRM process also includes objectives from the Principles for Responsible Banking
• Monitoring: Implementation is the responsibility of individual departments that administer the policies. The ESRM process is used for ESG factors assessments in risk management

Non-client third party policy – suppliers, so-called Know Your Supplier (KYS)

• Content: Addresses supplier-related ESG considerations

Approval and rules for the introduction of new and changes to existing KB products

• Content: Governs product introduction and changes

Climate change adaptation

Business continuity management system

• Content: Describes processes related to ensuring the continuity of services, even in cases where there have been incidents threatening the business in connection with physical risk

Risk management strategy

• Content: Includes ESG risks. The Group has conducted a detailed analysis of its business model's resilience through an internal document entitled "Business Environment Scan"
• Monitoring: KB Group monitors market developments, legislative changes, new environmental policies, and market surveys. ESG factor assessments are included in risk management

Energy efficiency

KB energy management standard

• Content: Describes the energy management of KB Group and the processes for collecting and calculating the carbon footprint

Deploying renewable energy sources

Policies covering this area include the KB carbon footprint measurement, Data collection methodology for calculating the carbon footprint of KB, and ESRM process.

Other elements (water, air, and soil)

The ESRM process also addresses other environmental elements that may impact climate change.

Overarching strategic framework

KB2025 Strategic Plan

• Governance: Presented in 2020. Progress is monitored quarterly and presented to top management. Management is financially incentivized to achieve climate-related aspects
• Content: The most crucial policy for KB Group, based on pillars of responsiveness, development, and responsibility, developed across nine thematic areas. The transition plan measures are part of this strategy
• Public availability: Internal policies and instructions are only accessible to employees, or upon request by auditors or regulators
• Links to standards: The Group follows commitments from:
  • Net-Zero Banking Alliance (NZBA) - 2021: Committed to proactively manage financing portfolios to become compatible with the Paris Agreement goals
  • Alliance for Zero-emission Future - 2022: KB is a founding member and main partner
  • Sustainable Finance Memorandum (Czech Banking Association) - 2021
  • IEA Sustainable Development Scenario (IEA SDS) - 2020
  • TCFD (Task Force on Climate-related Financial Disclosures) - 2019
  • Principles for Responsible Banking - 2019
  • Katowice Commitment (Paris Agreement methodology) - 2018
  • Paris Agreement (COP 21) - 2015
  • Equator Principles (EP) - 2007
• Monitoring: Findings from control departments (Compliance and Internal Audit), regulator findings, and feedback from report users are evaluated. If surveys and stakeholder dialogue result in requirements to modify existing policies, KB Group has a process in place governed by internal instruction INS 14-001. Newly adopted policies and modifications are communicated to affected persons by senior staff responsible for implementation

Sectoral policies

The parent company Société Générale (SG) sets detailed environmental and social rules and standards for financing business activities and projects in sensitive sectors. These sectoral policies:

• Public availability: Publicly available on the Komerční banka and Société Générale websites
• Content: Set targets in line with the Paris Agreement, including coal exit strategy by 2030 for EU and OECD countries
• Links to standards: Align with Paris Agreement goals and incorporate IEA SDS objectives

KB Group does not have a separate transition plan document; instead, transition plan measures are integrated into the KB2025 Strategic Plan and SG Group's sectoral policies.

Actions and resources in relation to climate change policies

Advisory Services

KB EU Point

• Description: Comprehensive advisory in the field of subsidies and investment incentives since 2003; services include preparation of applications for support, administration of projects, assessment of sustainability, pre-financing of subsidies and co-financing of projects
• Scope: Own operations and downstream (corporate clients)
• Time horizon: Ongoing since 2003
• Resources: Not quantified

ELENA (European Local Energy Assistance)

• Description: 3-year programme (until 2027) funded by European Investment Bank offering 90% discount on advice and grant application preparation for energy saving programmes
• Scope: Downstream value chain (medium-sized and larger enterprises with up to 3,000 employees and public administrations)
• Time horizon: Until 2027
• Supported projects: Investments in reducing energy consumption of existing buildings and increasing energy efficiency in production and technological processes
• Resources: Not quantified

Client Financing Programmes

Factoring KB - Municipal Fleet Renewal

• Description: Financing of municipal fleet renewal with focus on sustainability and waste management components
• Scope: Downstream value chain (municipal clients)
• Resources: Over CZK 5 billion in 2024

European Investment Bank Climate Action Agreement

• Description: Support for Climate Action projects (energy savings and renewable energy) through small reduction in business loan interest rate
• Scope: Downstream value chain (clients)
• Time horizon: 2024 onwards
• Resources: Not quantified

European Investment Fund (EIF) InvestEU Guarantees

• Description: Guarantees provided in European Union's InvestEU programmes offering preferential loans
• Scope: Downstream value chain (entrepreneurs)
• Resources: Approximately CZK 1 billion to more than 600 entrepreneurs in 2024

Microfinance Programme

• Description: Supports micro-entrepreneurs with up to 10 employees with focus on sustainable employment and social inclusion
• Scope: Downstream value chain (micro-entrepreneurs, including entrepreneurs with disabilities or without secondary education)
• Time horizon: 2024 (ongoing)
• Resources: Not quantified

EuroGreen Programme

• Description: Discounted loan with EIF guarantee for solar energy projects, storage and production of renewable energy products, and energy-saving renovations of commercial buildings; investments related to production of energy-saving products or reduction of climate vulnerability in agriculture
• Scope: Downstream value chain (corporate clients)
• Resources: Not quantified

EuroEdu Programme

• Description: Staff training support
• Scope: Downstream value chain
• Resources: Not quantified

EuroSocial Programme

• Description: Support for social enterprises
• Scope: Downstream value chain
• Resources: Not quantified

SGEF (Subsidiary) Programmes

InvestEU Programme with EIF

• Description: EUR 15 million guarantee for new loans for innovation and digitalisation for businesses with up to 500 employees
• Scope: Downstream value chain (businesses with up to 500 employees, Czech Republic and Slovakia)
• Time horizon: Contract signed July 2023; 70% allocated by end of 2024
• Expected outcomes: Benefit around 130 companies
• Resources: EUR 15 million guarantee; expected to support new financing at preferential interest rate, with at least one-fifth earmarked for sustainability projects

European Investment Bank Loan Agreement

• Description: Loan agreement to provide Czech and Slovak companies with new financing at preferential interest rate
• Scope: Downstream value chain (SMEs and mid-sized companies in Czech Republic and Slovakia)
• Time horizon: Agreement signed November 2024
• Resources: EUR 200 million
• Expected outcomes: Most funding earmarked for SMEs and mid-sized companies; at least one-fifth for sustainability projects

National Development Bank Partnership - SGEF

• Description: Financing of investments in machinery and equipment through Expansion and Energy Savings programmes; soft loans with possibility of deferring principal repayments and possible financial contribution towards interest payments
• Scope: Downstream value chain (businesses)
• Time horizon: 2024 extension to include Electric Mobility programme
• Electric Mobility Programme: Financing acquisition of electric vehicles (added 2024)
• Resources: Not quantified

Agricultural and Forestry Support Partnership

• Description: Preferential financing of agricultural equipment with interest subsidies under AGROÚVĚR PRÉMIUM programme; can be combined with subsidy programmes of State Agricultural Intervention Fund and various ministries
• Scope: Downstream value chain (agricultural sector)
• Time horizon: 13 years of operation
• Resources: Not quantified

Partnerships and Tools

ENVIROS Partnership

• Description: Long-standing partnership with ENVIROS environmental consultancy offering subsidies, carbon footprint assessments, and sustainability reporting; merger between ENVIROS and Fidelio confirmed in 2024
• Scope: Downstream value chain (corporate and municipal clients)
• Time horizon: 30 years since ENVIROS establishment; merger 2024
• Resources: Not quantified (partnership)

Carbon Footprint Calculator with Impact Metrics

• Description: Partnership launched end of 2024 enabling small and medium-sized businesses to calculate carbon footprints; digital online calculator for calculating carbon footprint including Scope 3
• Scope: Downstream value chain (SMEs)
• Time horizon: Launched end 2024
• Resources: Not quantified (partnership)

Společně udržitelně (Together Sustainably) Website

• Description: Website raising awareness of sustainability within companies; KB handed over project to CIRA Advisory in 2024 while remaining a partner
• Scope: Downstream value chain (companies)
• Time horizon: 2024 transition to CIRA Advisory
• Resources: Not quantified (partnership)

KB Nastartujte se (Start-up) Grant Programme

• Description: 12th year of grant programme supporting aspiring entrepreneurs
• Scope: Downstream value chain (entrepreneurs)
• Time horizon: 12 years operation
• Resources: More than CZK 1 million in prizes distributed in 2024

Resource Allocation Disclosure

The company states: "KB Group does not currently maintain records to disclose current and future financial resources allocated to the action plans. As the requirement to track current and future resources in this level of detail has been newly mandated by the CSRD legislation, resources for sustainability-related action plans for 2024 are not disclosed. KB Group plans to conduct an analysis of sustainability-related expenditures and, based on this analysis, set up a process to track expenditures to the extent required so that this information can be disclosed in future."

Targets related to climate change mitigation and adaptation

Greenhouse Gas Emissions Reduction – Own Operations

KB Group has set targets to reduce greenhouse gas emissions from its own activities to keep emissions at a low level. In 2023, the carbon footprint was 38,684.5 tons of CO2e and 23.2 kg CO2e per client. In 2024, the carbon footprint was reduced by 47.5% to 20,290.7 tons of CO2e.

Target metric: Carbon footprint (tons of CO2e and kg CO2e per client)

Progress to date:

• 2023: 38,684.5 tons of CO2e; 23.2 kg CO2e per client
• 2024: 20,290.7 tons of CO2e (47.5% reduction vs. 2023)

Note: The document states that "various measures have been implemented to reduce the Group's carbon footprint to the level of locked-in greenhouse gas emissions," including energy management, electric vehicles, and flexible work from home options.

Coal Sector Exit Target

In 2019, KB set a goal to reduce its exposure to clients with assets in coal mining or coal energy in EU and OECD countries by 2030 at the latest.

Target metric: Exposure to clients with assets in coal mining or coal energy

Target year: 2030

Baseline year: 2019

Scope: EU and OECD countries

Type: Absolute reduction target

Basis: Aligned with SG Group's Climate Strategy and NZBA commitment

Policy: KB does not provide new financing to clients whose annual revenues are more than 25% from thermal coal activities and who do not have a publicly stated timetable for exiting coal activities.

SG Group Sector Decarbonisation Targets (KB Group contributes)

KB Group contributes to achieving SG Group's sector-specific targets, though these are not directly applicable to KB Group:

Scope: SG Group financing portfolios; KB Group contributes through sectoral policies

Type: Mix of absolute and intensity-based targets

Basis: Based on IEA NZE 2050, WLTP, IMO, and other international standards

Renewable Energy Target

KB Group has been using almost exclusively renewable energy since 2023. Of the electricity consumed for the operation of office buildings, branch networks, data centres, and KB's vehicle fleet, 97.8% comes from renewable sources.

Target metric: Share of renewable energy in total electricity consumption

Achievement: 97.8% (2024)

Scope: Own operations (office buildings, branch networks, data centres, vehicle fleet)

NZBA Commitment

As a founding member of the UNEP-FI Net-Zero Banking Alliance (via SG Group in 2021), KB aims to become compatible with the goals of the Paris Agreement and proactively manage its financing portfolios.

Target: Alignment with Paris Agreement goals (1.5°C pathway)

Note: KB Group currently does not have its own targets directly based on the 1.5°C warming scenario of the Paris Agreement, but follows SG Group's commitments.

Energy consumption and mix

Energy consumption by source (2024)

Scope and methodology

KB Group measures and monitors electricity, gas, heat, and water consumption at metered locations with billing and sub-meters. For unmetered properties, energy payments are determined based on contractual agreements (e.g., proportion of property area used and number of employees). Energy consumption data are regularly compared year-on-year. Energy consumption data outside the organisation are monitored by sub-meters. Energy provided to another entity is deducted from KB's main meter consumption. For rentals without meters, a similar approach is used based on the proportion of rented area (minimal number of cases).

Of the electricity consumed for office buildings, branch networks, data centres, and KB's vehicle fleet, 97.8% comes from renewable sources. The remaining 2.2% comes from the standard energy mix of the Czech Republic/Slovakia and is used for external electric vehicle charging stations and cooling where KB is a tenant.

Energy intensity

Energy intensity data not disclosed for 2024.

Year-on-year changes

Energy and water consumption decreased year-on-year, mainly through optimising the real estate portfolio, branch network, and workplace sharing system. The sale of the building at Wenceslas Square 42 (vacating by 2027) is expected to result in annual savings of around 4.4 GWh of electricity and 2.9 GWh of heat.

Renewable energy generation

KB has 9 photovoltaic power plants installed with total peak capacity of 428 kWp. Eight new plants were commissioned in 2024, saving 138 MWh of electricity. In 2023, a 94.5 kWp plant was installed with average annual production of 91.2 MWh.

Gross Scopes 1, 2, 3 and Total GHG emissions

Overview

Komerční banka Group reports its greenhouse gas emissions in accordance with the GHG Protocol and ESRS E1 requirements. The Group has calculated its carbon footprint for Scope 1, Scope 2, and selected Scope 3 categories.

Scope 1: Direct GHG emissions

Note: The excerpts do not contain explicit Scope 1 figures or sub-breakdown (stationary combustion, mobile combustion, process emissions, fugitive emissions) for KB Group.

Scope 2: Indirect GHG emissions from purchased energy

Note: The excerpts do not contain explicit Scope 2 location-based or market-based figures for KB Group.

Scope 3: Indirect GHG emissions from value chain

Methodology notes:

• Employee commuting (Category 7): Data obtained through questionnaires sent to all employees. Employees report their commuting patterns for a sample day in each of the four seasons. Total kilometres for the year are reduced by the average number of days spent in home office, sick leave, and holidays. Total kilometres per employee are then multiplied by the total number of employees.
• Financed emissions (Category 15): KB Group applies the GHG Protocol and PCAF (Partnership for Carbon Accounting Financials) methodologies. Where specific measured data on counterparty emissions are unavailable, the Group uses PCAF emission factors and proxy methods. For mortgages, a specific methodology based on Energy Performance Certificates (EPC) is used, or estimates are made using internal property data if an EPC is unavailable. The Group aims to collect data directly from counterparties through questionnaires or publicly available sources but currently relies on indirect sources and estimates due to data availability constraints.
• Energy and water consumption: Mostly read directly from meters on a monthly basis. Where not possible, either contractual allocation keys are applied, or average specific consumption per square meter is calculated from past invoices and multiplied by current occupied area.

Total GHG emissions

GHG intensity

Biogenic CO2 emissions

Regulated emissions (EU ETS)

Not disclosed.

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Disclosure quality note: The excerpts provided do not contain the actual quantitative GHG emissions figures (Scope 1, 2, 3, totals, or intensity metrics) for Komerční banka Group for 2024 or 2023. The sustainability statement describes the methodology and data collection approaches (particularly for employee commuting and financed emissions under Scope 3, category 15), but the numerical tables with emissions data are not included in the excerpts. The Group uses indirect data sources and proxy methods for certain categories due to data availability constraints, in line with ESRS guidance.

Policies related to own workforce

Komerční banka (KB) Group has established comprehensive policies governing its workforce across multiple areas including working conditions, human rights, occupational safety, diversity, remuneration, and development.

Labour Code

• Scope: All employees in employment relationships in the Czech Republic
• Main content: The basic legal norm governing relations arising during the performance of dependent work between employees and employers
• Monitoring: Compliance monitoring covered by the HR Department and trade unions (where present)

Collective Agreement

• Scope: All employees (including non-unionised employees) of KB, Modrá pyramida, and ESSOX working under employment contracts in the Czech Republic
• Main content: Regulates individual and collective relations between the employer and employees represented by trade unions, covering labour law, wage and employee rights, and obligations of both parties. Sets minimum wage above the Czech Republic minimum wage
• Governance: Binding on the parties (employer and trade union)
• Monitoring: HR Department and trade unions

Employment Rules (Work Regulations)

• Scope: All KB employees
• Main content: Elaborates on Labour Code provisions regarding employer and employee obligations from labour relations. Defines scope, powers, and duties of employer and employee; establishes conditions for equal treatment, prohibition of discrimination, protection of personal data, employment creation and termination, working time, overtime and vacation; addresses safety and health protection at work and procedures for occupational accidents
• Monitoring: HR Department and trade unions

Remuneration Policy

• Scope: All employees
• Main content: Sets out principles of remuneration aligned with Czech legal requirements. Ensures gender-neutral approach to remuneration
• Monitoring: HR Department and trade unions

Remuneration Policy for Members of the Board of Directors and the Supervisory Board of Komerční banka, a.s.

• Scope: Members of the Board of Directors and Supervisory Board
• Main content: Regulates rules for remuneration of Board and Supervisory Board members
• Oversight: Nominations Committee and Remuneration Committee

SG Code of Conduct

• Scope: Entire SG Group including KB
• Public availability: https://www.kb.cz/getmedia/50272b65-a151-4a76-9cb0-1409c8cfe08b/code_of_conduct_eng.pdf
• Main content: Summary of fundamental ethical principles including: equality and justice, preventing harm, realism, due diligence, impartiality, truthfulness. Covers prevention of discrimination, confidentiality of information, conflict of interest, insider trading, and whistleblowing
• International linkages: Based on internationally recognized ethical standards
• Monitoring: Assessed through regular performance evaluations including mandatory assessment of compliance with the Code of Conduct; monitored through First Level Controls, Second Level Controls, key risk indicators, whistleblowing system, and risk mapping
• Training: All employees (including part-time workers) receive training at the beginning of employment and every 2 years thereafter; new employees must sign off confirming understanding

Code of Ethics (Ethical Code)

• Scope: All KB employees
• Main content: Establishes basic rules of professional conduct, especially compliance with laws and generally accepted ethics. Based on SG Code of Conduct principles. Covers: equality and justice, preventing harm, realism, due diligence, impartiality, truthfulness. Addresses anti-discrimination, conflict of interest, whistleblowing, anti-corruption and anti-bribery, confidentiality, banking secrecy, anti-competitive practices, anti-money laundering, insider dealing, and compliance with environmental, health and safety regulations
• Governance: Oversight by Appointment Committee of the Supervisory Board; effectiveness assessed by Compliance Committee
• Monitoring: Effectiveness assessed through internal controls (First and Second Level Controls), key risk indicators, whistleblowing system, regular risk mapping of exposed areas (anti-bribery, corruption, conflict of interest), and mandatory training programmes followed by tests; verified by internal audit, SG supervision, and Czech National Bank
• Training: Mandatory for all employees; linked to remuneration principles; breaches can result in warnings or dismissal

SG Code Governing the Fight Against Corruption and Influence Peddling

• Scope: SG Group including KB
• Public availability: https://www.kb.cz/getmedia/5ca79c56-5683-47b5-85aa-e4af43e66ec8/code-governing-the-fight-against-corruption-and-influence-peddling-uk-(1).pdf
• Main content: Zero tolerance for fraudulent behaviour, corruption, bribery, antitrust/anti-competitive practices, discrimination or harassment
• Monitoring: All applicants informed at application stage; new employees required to sign off confirming understanding

Tax Code of Conduct of Société Générale Group

• Scope: SG Group including KB
• Public availability: https://www.kb.cz/getmedia/7632c13e-f17b-4383-a0b7-05c84489cbca/tax_code_of_conduct_of_societe_generale_group_uk.pdf
• Main content: Specific code dealing with tax issues

Anti-Bribery Policy (KB Anti-Bribery Policy)

• Scope: KB employees and third parties including clients, suppliers, and financial service providers
• Main content: Establishes detailed rules to limit corruption and bribery risk; confirms SG commitment to combat bribery and corruption; provides framework for effective detection, management and mitigation of bribery and corruption risks
• Governance: Compliance Committee approves basic internal policies relating to compliance risk including anti-corruption measures; Compliance Department establishes rules
• Monitoring: Mandatory training for all employees (100% of risk functions); Board of Directors receives same training as employees; employees engaging in corrupt conduct subject to serious penalties including criminal sanctions and internal disciplinary measures

Education and Development Policy

• Scope: KB Group employees
• Main content: Defines responsibilities, roles, and processes for education and development of employees. All employees have right to deepen knowledge and skills through mandatory and optional training, courses, professional exams
• Monitoring: HR Department

Employee Benefits Policy

• Scope: Employees covered by collective agreements
• Main content: Establishes conditions for providing employee benefits agreed in collective bargaining
• Monitoring: HR Department

Occupational Health and Safety (OHS) Policies

• Scope: All employees and KB premises
• Main content: Procedures for prevention of occupational injuries; procedures for handling occupational injuries described in Work Regulations. Ensures compliance with health and safety requirements during reconstructions and workplace modernization
• Monitoring: Independent inspections by Trade Union of Banking and Insurance Workers assessing ergonomic conditions and quality of working/hygiene conditions; official records and written recommendations from each inspection; OHS manager oversees injury reporting and investigations

Diversity Principles

• Scope: Board of Directors, Supervisory Board, and key functions
• Oversight: Approved by Nominations Committee
• Main content: KB is gold signatory of European Diversity Charter since 2020. Principles of non-discrimination are integral to corporate culture and strategic priorities. Diversity encompasses age, racial and ethnic origin, nationality, gender, sexual orientation, political beliefs, religion, minority status, disability, social background
• International linkages: European Diversity Charter endorsed by European Commission
• Monitoring: Nominations Committee assesses collective suitability and contribution to functioning of governance bodies

Charter of Fundamental Rights and Freedoms

• Scope: Applies in Czech Republic; Title 2 regulates human rights and fundamental freedoms
• Main content: Expresses relationship between state and citizen; part of constitutional order of Czech Republic

Civil Code

• Scope: Czech Republic
• Main content: Title 20 guarantees right to free association

Collective Bargaining Act

• Scope: Trade unions and employers in Czech Republic
• Main content: Regulates collective bargaining with aim of concluding collective agreements

International Labour Organization Conventions

• Scope: Ratified by Czech Republic, applicable to KB
• Main content: Set of treaties including Convention No. 87 Freedom of Association and Protection of the Right to Organise
• International linkages: ILO Conventions ratified by Czech Republic

KB2025 Strategic Plan

• Scope: KB Group
• Main content: Based on pillars of responsiveness, development, and responsibility; developed in nine thematic areas. Includes targets for reducing greenhouse gas emissions, evaluations in international ratings, Equal Pay Gap goals
• Governance: Monitored quarterly at sponsor level, Executive Committee level (PriorQBR ceremony), wider management level (PreQBR ceremony), and QBR (Quarterly Business Review) meetings
• Monitoring: Continuous evaluation and incorporation into strategic planning and management process; quarterly assessment at multiple governance levels

Policies Based on International Standards

KB policies are based on current legislative requirements and internationally recognized documents in business and human rights, covering:

• Human trafficking
• Forced labour
• Child labour

International frameworks referenced:

• UN Guiding Principles on Business and Human Rights (UNGPs)
• OECD Guidelines for Multinational Enterprises
• ILO Conventions (ratified by Czech Republic)
• Paris Agreement on Climate Change (2015)
• Equator Principles (applied since 2020 through ESRM process)
• UN Sustainable Development Goals
• Principles for Responsible Banking (SG founding signatory 2019)
• Net-Zero Banking Alliance (through SG, 2021)

Implementation and Control Mechanisms

All policies are implemented through:

• Regular mandatory training (every 2 years for general staff, more frequently for exposed staff)
• First Level Controls and Second Level Controls
• Key risk indicators
• Whistleblowing system evaluation
• Regular risk mapping of exposed areas
• Internal audit verification
• SG Group supervision
• Czech National Bank supervision (on-site and off-site inspections)
• Annual employee satisfaction surveys
• Performance assessments including mandatory Code of Conduct compliance
• Disciplinary procedures for violations

Taking action on material impacts on own workforce

Training on Rules of Conduct and Ethical Behaviour

Action Description: Mandatory training programme on ethical conduct, Code of Conduct, and anti-corruption for all KB employees. The training raises awareness of ethical conduct principles and values.

Scope: Own operations (KB Group employees)

Time Horizon:

• Initial training at beginning of employment
• Regular training every 2 years for all employees
• From second half of 2024: extended to employees working under contract of employment or employment contract
• Ad hoc and more frequent training for exposed staff

Target Coverage: 100% of employees, including part-time workers (excludes only employees on maternity leave or long-term absence)

Training Participants (2024):

Training Programmes:

Resources Allocated:

• Non-financial: Compliance Department responsible for delivery; training covers 7,684 employees across KB Group
• Training infrastructure: online and offline programmes of varying duration (45-120 minutes)

Link to Policy:

• KB Code of Ethics
• SG Code of Conduct
• SG Code governing the fight against corruption and influence peddling
• KB Anti-Bribery Policy
• Internal policies on anti-discrimination, conflict of interest, whistleblowing

Expected Outcomes:

• 100% coverage of risk functions in training
• Zero tolerance for fraudulent behaviour, corruption, bribery, anti-competitive practices, discrimination or harassment
• Remuneration principles linked to adherence to Code of Conduct

Anti-Corruption and Anti-Bribery Risk Assessment (ABC Risk Assessment)

Action Description: Periodic assessment to identify areas across KB's departments where there is risk of corruption, bribery, or other improper behaviour, and evaluate whether appropriate anti-corruption measures are in place.

Scope: Own operations (KB Group entities)

Time Horizon: Once every 3 years

Resources Allocated:

• Non-financial: Compliance Department leads the activity
• Activity conducted across all KB Group entities

Link to Policy:

• KB Anti-Bribery Policy
• SG Group anti-bribery code
• Internal anti-corruption policy

Expected Outcomes:

• Identification of high-risk areas
• Mitigation measures for identified corruption risks

Anti-Corruption Protection Working Group

Action Description: Establishment of permanent working group with KB Group-wide remit to assess contractual documentation and strengthen anti-corruption and anti-bribery protection.

Scope: Own operations (KB Group-wide)

Time Horizon: Established in 2023 (ongoing)

Resources Allocated:

• Non-financial: Permanent working group with cross-functional membership

Link to Policy:

• KB Anti-Bribery Policy
• Internal anti-corruption policy

Enhanced Due Diligence and Compliance Monitoring

Action Description: Implementation of measures including amended internal policy on anti-corruption, stricter rules for offering and accepting gifts and invitations, database tool for recording gifts and invitations, and monitoring/control of adherence.

Scope: Own operations (all KB employees)

Time Horizon: Ongoing (measures implemented following SG Group emphasis)

Resources Allocated:

• Non-financial: Database tool infrastructure, Compliance Department oversight, manager training

Link to Policy:

• Internal policy on anti-corruption (amended)
• Rules on gifts and invitations
• Whistleblowing procedures

Expected Outcomes:

• Enhanced detection and prevention of corruption risks
• Systematic recording and monitoring of gifts/invitations

Onboarding Process for New Employees

Action Description: Since 2020, new employees required to sign off document confirming they have read and understood latest version of Code of Conduct. All applicants informed at early application stage about Code of Conduct and anti-corruption code.

Scope: Own operations (all new hires)

Time Horizon: Ongoing since 2020

Resources Allocated:

• Non-financial: Human Resources process integration

Link to Policy:

• Code of Conduct
• SG Code governing the fight against corruption and influence peddling

Expected Outcomes:

• 100% awareness of conduct requirements from point of hire
• Prevention of conduct violations through early awareness

Characteristics of the undertaking's employees

Total headcount and FTE

Full-time equivalents (FTE) - KB Group:

Note: Average recalculated number of employees during the year (full-time equivalent), according to the CSRD methodology. According to the methodology of the Czech Statistical Office, the average recalculated number of employees was 7,456, down (1.3%) year on year.

Total employees (headcount):

The number of people working under an employment contract (according to the Czech Statistical Office methodology) declined year on year by 1.3% to 7,456 employees.

Employee turnover

No specific turnover rate or number of employees who left is disclosed in the provided excerpts.

New hires

No specific number or rate of new hires is disclosed in the provided excerpts.

Breakdown by gender, region, contract type, and employment type

No breakdown of headcount by gender (male/female/other/not disclosed), by country or region, by employment contract type (permanent/temporary/non-guaranteed hours), or by employment type (full-time/part-time) is disclosed in the provided excerpts.

Subsidiary-level headcount

Limited FTE data is provided for individual KB Group entities:

Note: These figures represent average FTEs for individual entities but do not provide the consolidated breakdown by gender, region, or contract type required by ESRS S1-6.

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

Non-employee workers

The excerpts acknowledge the existence of external and temporary staff members in the context of whistleblowing procedures, where it is stated that "A whistleblower can be any employee, external and temporary staff member, administrator, or shareholder, and, as part of the duty of care, any service provider with whom an established commercial relationship is maintained (including suppliers or subcontractors)."

However, no quantitative metrics are provided regarding:

• Number of non-employee workers
• Breakdown by type (contractor, agency, self-employed)
• Methodology for counting (headcount vs FTE)
• Multi-year comparisons

Collective bargaining coverage and social dialogue

Collective bargaining coverage

In accordance with law and the relevant collective agreement, KB allows all employees the right to be unionised. In entities of KB Group where collective agreements are in place (KB, Modrá pyramida, ESSOX), these agreements apply to all employees under employment contracts (excluding employees working outside a standard employment relationship), thereby covering 98% of the employees in these companies.

The collective agreement applies to all employees under employment contracts, regardless of whether an employee is in the union or not, and regardless of the agreed-upon work hours.

Collective agreements concluded at KB, Modrá pyramida and ESSOX are binding on the parties and apply to all employees (employees working under employment contracts, not employees working outside standard employment relationships) of the respective companies in the Czech Republic, including non-unionised employees.

In KB Group entities that do not have unions, and therefore no collective agreements, a group approach is applied. This means that in these entities, similar benefits and advantages are provided according to internal regulations that are similar to collective agreements.

Social dialogue arrangements

KB, Modrá pyramida and ESSOX have collective agreements and social dialogue with unions. All employees have the right to express their opinions and to contact the management of the companies concerned or the union organisation.

Unions operate in three entities of the KB Group: Komerční banka, Modrá pyramida, and ESSOX. In Komerční banka, there are 28 basic organisations of the Komerční banka Union Organisation (including the Enterprise Committee of the Union Organisation, which primarily oversees communication with the employer) and one in Modrá pyramida.

Workers' representatives structure

The roles and highest positions within KB Group responsible for ensuring co-operation with unions and the workforce are as follows:

• Sylva Kynychová (Chairwoman of the Enterprise Committee of the KB Union Organisation, member of the KB Supervisory Board as an employee representative, released from her KB work duties by 80%)
• Pavel Jelínek (Vice-Chairman of the Enterprise Committee of the KB Union Organisation)
• Jaroslava Kloudová (Vice-Chairwoman of the Enterprise Committee of the KB Union Organisation)
• Ondřej Kudrna (Member of the KB Supervisory Board as an elected employee representative)
• Employer representatives – HR Director Ctirad Lolek, representing KB and Modrá pyramida, and CEO of ESSOX Jana Hanušová, representing this subsidiary

European Works Council

The European Works Council operates at the Société Générale level, bringing together all SG group entities in Europe while informing about the group's vision and direction. The Council meets regularly twice a year. KB and Modrá pyramida have the right to two representatives in the Council.

Collective bargaining process

Collective bargaining takes place according to the Collective Bargaining Act and is conducted regularly every year. The collective agreement is typically concluded for a period of 4 years (it is the same for Komerční banka and Modrá pyramida). The current collective agreement at Komerční banka is valid until the end of 2026. The collective agreement at ESSOX is valid until the end of 2027.

Every two weeks, the chairperson of the Enterprise Committee of the Union Organisation of KB (EC UO KB) meets with the Executive Director of HR KB and every two weeks with representatives of HR Business Partners at KB. Monthly meetings of the EC UO KB are held, where an HR representative is always invited.

The results of negotiations between the employer and the Union Organisation are available to all employees, including the full text of the Collective Agreement.

Information and consultation mechanisms

In all KB Group companies, employees are informed primarily through their direct supervisors. At least twice a year, all employees meet with the management of the companies, at which time employees have the opportunity to openly discuss and ask questions about everything that interests them. At the same time, employees are informed about important matters via the intranet or email correspondence.

Employees can also take advantage of the open-door policy of the companies' statutory bodies and senior managers in order to ask questions of them at any time. They can also contact the Human Resources representatives. If they have unanswered questions, they can contact the company's trade unions or the Union of Finance and Insurance Workers.

Union membership and legal framework

The union organisation is a member of the Trade Union of Banking and Insurance Workers (OSPPP), which is further a member of ČMKOS and UNI Finance, organisations that provide union members with educational programmes and ensure co-ordination at the national level.

Relations between the Union Organisation and the employer are governed by the Charter of Fundamental Rights and Freedoms, the Act on the Association of Citizens, the Collective Bargaining Act, and the conventions of the International Labour Organization (Convention on Freedom of Association, Convention on the Right to Organise and Collective Bargaining, Convention on the Protection of Human Rights and Fundamental Freedoms).

The right to freedom of association and collective bargaining has also been supported by the parent company Société Générale through its signing and conclusion of the Global Agreement on Fundamental Rights between SG and UNI Global Union in 2015, which was renewed in 2019 and 2023.

Diversity metrics

Gender diversity in top management

Komerční banka (parent company)

2024

KB Group

2024

Age band distribution

Komerční banka (Czechia, year end)

2024

KB Group (Czechia, year end)

2024

Employees with disabilities

Komerční banka

2024

Note: Employee with a disability = physically disabled person, severely physically disabled person, physically disadvantaged person.

KB Group

2024

Note: Employee with a disability = physically disabled person, severely physically disabled person, physically disadvantaged person.

Qualitative context

Top management is defined as Board of Directors; executive, strategic, and operational management. Gender parity was achieved at executive director level with five women appointed to executive director positions. The Bank has been a gold signatory to the European Diversity Charter since 2020.

Adequate wages

Benchmark used: Komerční banka Group states that all employees working under employment contracts and employees working under agreements are paid a reasonable wage "in accordance with the applicable benchmarks according to the Fair Wage Network database" (https://fair-wage.com/).

Coverage: The disclosure states "All KB Group employees working under employment contracts and employees working under agreements" are covered by this benchmark. This represents 100% of the workforce described in the statement.

Geographic scope: The disclosure focuses on Czech Republic operations. The minimum wage in KB Group is stated to be above the minimum wage in the Czech Republic.

Relationship to minimum wage and collective bargaining: The company explicitly states: "The minimum wage in KB Group is above the minimum wage in the Czech Republic and, where there are unions, it is set in the collective agreement."

For KB specifically, the minimum wage in 2024 was CZK 27,000 for a full-time position, which was 1.43 times the legal minimum wage in the Czech Republic.

Methodology: Wages are determined based on:

• Classification of job position according to profession and career level
• Demands of the position (required knowledge, experience, skills, responsibilities)
• Internal equity and external market competitiveness
• Gender-neutral: starting salary is the same for men and women in the same position
• Base salary is reviewed at least once every 12 months (not earlier than 6 months from last review)

Policy framework: The adequate wages commitment is governed by:

• Salary regulations of Komerční banka, a.s.
• Collective agreements (at KB, Modrá pyramida, and ESSOX)
• SG Code of Conduct principles including equality and justice

Targets: No specific forward-looking targets disclosed regarding adequate/living wages. However, the company has a related target to achieve zero Equal Pay Gap by 2025 (reduced to 1.1% in 2024 from 1.8% in 2023).

Monitoring: Monitoring of compliance with wage-related documents is covered by the HR Department and trade unions (in entities where unions operate).

Social protection

Coverage and schemes

KB Group provides social protection to all employees within KB Group, at least to the extent required by legal obligations, in all of the following cases:

• Illness
• Unemployment from the time the employee starts working for the company
• Work-related injury and acquired disability
• Parental leave
• Retirement

Social protection applies to all employees under employment contracts. The Group complies with standard labour regulations effective in the Czech Republic as a member state of the European Union.

Social protection in case of illness

Beyond the social protection provided by law, the Bank offers employees in employment additional benefits:

• 3 days of paid leave (sick days) per year
• Financial assistance in cases of long-term illness
• Telemedicine service (online medical advisory available 24/7)
• Advisory Programme for psychological, legal, and social counselling

Social protection in case of unemployment

The Bank provides severance pay beyond what is required by law to employees in employment. The amount of severance pay beyond the Labour Code is determined by the number of years continuously worked in a primary employment relationship at Komerční banka or within the Komerční banka Group.

Social protection in case of work-related injury and acquired disability

Beyond the social protection provided by law, benefits include:

• 5 extra days of paid leave per year for persons with disabilities
• Extraordinary social assistance for employees who find themselves in difficult and adverse life situations (non-entitlement assistance decided solely by the employer)

Social protection in case of parental leave

Beyond the social protection provided by law, benefits include:

• Financial contribution to parents who return earlier from parental/maternity leave
• Supplementing the amount of maternity benefits to the level of the basic salary (for the first 14 weeks of maternity leave)
• Financial contribution during the use of 1 week of paternity leave (supplementing the amount of paternity leave benefits to the level of the basic salary)
• 4 days of paid leave per year for single parents and pregnant women
• Support for co-operation during leave if there is mutual interest and need
• Support for reintegration (shorter working hours, working from home, flexible working hours)

Social protection in case of retirement

Beyond the social protection provided by law, benefits include:

• Preferential banking services even after retirement
• A retirement reward
• Continued contact with retired employees for occasional work to cover temporarily increased capacity needs

Pension contributions

The Bank provides contributions to retirement pension insurance and capital life insurance schemes:

• Social costs include CZK 138 million (2023: CZK 128 million) paid to employees' retirement pension insurance scheme
• CZK 21 million (2023: CZK 24 million) for employees' capital life insurance scheme
• A contribution to pension insurance and supplementary pension savings up to 3% of the salary (part of employee benefits structure)

Retirement benefits plan provision

The Bank maintains provisions for retirement and disability benefits. Employees are entitled to receive these benefits if employed until retirement age or entitled to a disability pension, provided they were employed within the Group for a minimum defined period.

Movements in retirement benefits plan provisions (CZKm):

Scope

Social protection applies to all employees within KB Group, at least to the extent required by legal obligations. Benefits beyond legal requirements apply primarily to employees in employment (employment contracts), while employees working under agreements on work activity (DPČ) and on work performance (DPP) do not receive the full benefits structure.

Legal framework

The companies of KB Group comply with:

• Standard labour regulations effective in the Czech Republic as an EU member state
• Czech National Bank regulations as supervisory authority
• Certain rules of Société Générale and international standards
• International Labour Organization conventions
• Regulation (EC) No. 593/2008 for cross-border employment

Persons with disabilities

Employees with disabilities

Special attention is given within KB Group to employees with disabilities. Based on their specific disadvantages, the working environment is adapted for these colleagues (e.g. providing barrier-free access, more suitable monitors, or work chairs) and special work tools are provided (e.g. special software for vision impairment). The most common positions they hold at KB include banking advisor, transaction processing specialist, cashier, middle office specialist, client service specialist, or telephone service sales representative.

KB Group supports

KB Group creates suitable conditions for employees with disabilities, providing, among other things, barrier-free access, specialised IT and software equipment, as well as flexible work arrangements.

Metrics - 2024

Komerční banka:

KB Group:

Note: Employee with a disability = physically disabled person, severely physically disabled person, physically disadvantaged person.

Support measures

The most common positions these individuals hold include bank advisor, transaction processing specialist, cashier, middle office specialist, client services specialist, or telesales specialist. Based on specific disabilities, the work environment is adapted (barrier-free access, monitor, chair) and special work tools are provided (e.g. special software for visual impairments).

Additionally, KB Group focuses on supporting individuals from socially disadvantaged groups, such as single mothers.

Social protection

Beyond the social protection provided by law, employees with disabilities receive:

• 5 extra days of paid leave per year for persons with disabilities
• 1 additional day of leave for employees with disabilities
• Extraordinary social assistance for employees who find themselves in difficult and adverse life situations

Training and skills development metrics

Performance and career development reviews

Komerční banka (2024)

KB Group (2024)

Average training hours per employee

Komerční banka (2024)

KB Group (2024)

Average training hours by employee category

Komerční banka (2024)

KB Group (2024)

Methodology note

Male and female employees have always had and have exactly the same training opportunities.

Context

All employees under employment contracts undergo an annual evaluation of their work results, during which possibilities for further professional growth and personal development are discussed. The annual evaluation combines an assessment interview with two-way feedback. Employees working outside a standard employment relationship do not have regular, official performance evaluations.

Health and safety metrics

Coverage of health and safety management system

A comprehensive occupational health and safety management system applies to 100% of individuals within the workforce.

All employees under both standard and non-standard employment contracts are required to complete mandatory OHS and FP training. KB Group fully complies with its legal obligations to ensure the safety and health protection of employees at work (OHS) and fire protection (FP) while considering the risks that could potentially threaten their life and health while performing their duties.

Work-related injuries and fatalities (2024)

Reporting and investigation procedures

In the event of an employee injury, the employee is required to report it to their supervisor. The supervisor records the injury in the Injury and Minor Injury Book. In case of work incapacity, the "Injury Report" document is further processed in accordance with Government Regulation No. 201/2010 Coll. The legal department provides a statement on behalf of the employer, determining whether it is a work-related injury. The Injury Report is prepared by the supervisors in co-operation with the OHS co-ordinator and a professionally qualified person, who then conducts a local investigation based on the severity of the injury and takes measures to prevent recurrence. The Injury Report must be sent by the 5th day of the following month.

Selected workplaces within KB are inspected by an independent body, specifically the Trade Union of Financial and Insurance Workers. These inspections include an assessment of the ergonomic setup of workplaces and an evaluation of the quality of working and hygienic conditions at the workplace.

Work-life balance metrics

Entitlement and usage of family-related leave

Komerční banka:

KB Group:

Note: The information in the table applies only to employees who were entitled to take family leave in the given year.

Supporting policies and benefits

Maternity and paternity support:

• KB Group supplements the maternity benefit to the level of the employee's base salary for the first 14 weeks of maternity leave for all employees on maternity leave
• If the father (a KB employee) takes parental leave after the initial six weeks, he is also eligible for this supplement
• KB Group supplements the paternity leave benefit up to the level of the base salary for one week
• Financial contribution to parents who return earlier from parental/maternity leave

Benefits for same-sex couples:

• KB Group has established rights for same-sex couples concerning important personal obstacles at work, thereby aligning the rights of same-sex couples with those of heterosexual couples as stipulated by law

Work-life balance measures:

• KB Group supports early return of parents from maternity and parental leave
• Upon returning from maternity or parental leave, KB assists employees with reintegration through shorter working hours, possibility of working from home, flexible working hours, and/or combinations of these options
• If there is mutual interest and need, collaboration can be set up during the leave

Return-to-work rate: Not disclosed.

Compensation metrics

Pay gap

KB Group reports multiple compensation gap indicators:

Equal Pay Gap (like-for-like)

KB Group strictly adheres to gender equality and equal pay for equal work. The Equal Pay Gap represents the difference in wages between men and women in the same position (where at least one man and one woman hold that position). This is a key measurement indicator ensuring compensation is the same for the same work and performance under the same transparent circumstances.

• 2024: 1.1%
• 2023: 1.8%
• 2020 (baseline): 2.6%
• Target: 0% by 2026

This indicator compares wages of all positions of employees under employment contracts. Employees working outside standard employment relationships (agreements on work activity and agreements on work performance) are not included.

Unadjusted gender pay gap (organizational level)

In 2024, the pay gap between men and women in KB Group, defined as the difference in average compensation levels of male and female employees expressed as a percentage of the average male compensation level, was 38%.

This disparity reflects not only different compensation levels but also the varying representation of men and women in different segments of the job market and hierarchical levels within the organisation. This indicator does not compare pay of employees in the same job positions but reflects overall pay differences across the organisation resulting from the diversity of job roles, responsibilities, and the value of individual job positions.

Remuneration ratio

In 2024, the ratio of the total annual compensation of the highest-paid employee (typically CEO) to the median total annual compensation of all employees (excluding the highest-paid employee) in KB Group was 16.7:1.

Methodology

Scope of indicators

The calculation of pay gap and remuneration ratio indicators includes:

• All employees under employment contracts
• Employees working outside standard employment relationships (agreements on work activity - DPČ, and agreements on work performance - DPP)
• All regulated consolidated entities of KB Group as of 30 September 2024
• Positions with specific contracts (performance of duties, mandate, managerial) are not included in remuneration ratio calculation, as they are not considered employees under Czech law

Employees under employment contracts

The calculation of the fixed salary component is based on the base salary as of 30 September 2024, which is adjusted to a full-time equivalent and annualised. It includes supplements specific to the position (e.g. cash handling allowances). The variable component includes bonuses and LTI (Long-Term Incentives) for the year 2023. For new hires, the variable component is zero in the calculation. Employees in off-the-record status are not included. Benefits are not added, as eligibility for them is not specifically conditioned by gender.

Employees working outside standard employment relationships (DPP, DPČ)

These employees are compensated only with a fixed salary component. The calculation of the monthly fixed salary for 1 FTE is based on the hourly rate as of 30 September 2024, calculated as hourly rate × 173.92 (number of hours for labour law purposes). The data includes employees who recorded at least one hour worked in the month of September and were employed as of 30 September 2024.

The inclusion of fixed and variable salary components is in accordance with the methodology set for these indicators across the entire SG Group.

Adequate wages

All employees of KB Group are paid adequate wages in line with applicable reference values according to the Fair Wage Network database. The minimum wage at KB in 2024 was CZK 27,000 for a full-time position, which was 1.43 times the legal minimum wage in the Czech Republic.

Incidents, complaints and severe human rights impacts

Incidents of discrimination and complaints

In 2024, KB Group received 26 complaints concerning undesirable behaviour, discrimination, and violations of the Ethical Code.

Of these 26 complaints:

• 18 cases were confirmed as valid, where employees' conduct or behaviour was not adequate for their job duties
• 8 cases were not substantiated (validity of complaints concerning undesirable behaviour, discrimination, and violations of the Ethical Code was not confirmed)

For most of the confirmed cases, an appropriate remediation plan was implemented in accordance with the investigation's findings.

External complaints and fines

In 2024, KB Group:

• Neither recorded complaints filed through external bodies
• Did not receive any fines as a result of the aforementioned incidents and complaints

Severe human rights impacts

KB Group has implemented processes related to the protection of human rights and currently does not record any significant incidents concerning this area.

Scope

The reported data covers incidents, complaints, and human rights impacts related to KB Group's own workforce.

Policies related to consumers and end-users

KB Group has established an extensive regulatory framework to manage potential impacts, risks, and opportunities in relation to consumers and end-users. The main policies and regulations apply to all clients.

Scope: All clients

Governance: The process for creating new policies and internal regulations, including amendments to existing ones, is defined by the internal regulation "Creation and Management of Internal Regulations." When preparing regulations and policies, KB Group bases them on applicable legislative requirements and considers all human rights requirements. Oversight of compliance with processes and procedures within KB Group is ensured by the Regulatory Compliance Department, which ensures that regulations and policies are in line with applicable legislative requirements and that the Group's activities comply with these internal regulations and policies, regulatory rules, and standards of professional conduct.

Links to international standards: When preparing regulations and policies, KB Group considers all human rights requirements. The company confirms non-respect or respect of the UN Guiding Principles on Business and Human Rights, ILO Declaration on Fundamental Principles and Rights at Work, or OECD Guidelines is addressed in the disclosure.

KB Group has not recorded any cases of human rights violations among its clients in the past.

Information-related impacts for consumers and end-users

GDPR – Exercise of Data Subjects' Rights

Key content: The purpose of this instruction is to establish the principles and responsibilities for handling requests for the exercise of data subject rights related to the processing of personal data.

Monitoring: Monitoring is under the responsibility of the Office of the Data Protection Officer (DPO).

GDPR – Handling Personal Data Security Breaches

Key content: The instruction establishes basic rules for handling personal data security breaches.

Monitoring: Identification of cases is the responsibility of all affected employees. Evaluation of such cases and their escalation for resolution or potential reporting to the supervisory authority is under the responsibility of the DPO Office, in collaboration with the owners of the respective activities if necessary.

Personal Data Protection Policy of KB and the Office of the Data Protection Officer

Key content: The directive establishes the main principles and guidelines for processing personal data within KB and defines the roles and responsibilities of the Data Protection Officer (DPO) at KB.

Monitoring: Ensuring compliance with the established rules is the responsibility of all affected employees. Governance over the rules and principles in the area of data protection is the responsibility of the GDPR Squad. Regulatory interpretation and oversight in the area of data protection is the responsibility of the DPO.

Personal Data Protection in Change Implementation (Privacy by Design)

Key content: The instructions establish a specific way of implementing the principles of personal data protection during the implementation of changes (Privacy by design) following Directive 41 Protection of personal data in the form of specific technical and organisational measures required so that the principles of personal data protection are taken into account during the implementation of changes already at the design stage of modifications to processes, information systems and information processing.

Monitoring: Defining the described principles is the responsibility of the owners of the respective activities.

Pseudonymisation and Anonymisation of Personal Data

Key content: The instruction sets out the principles for pseudonymisation and anonymisation of personal data within KB.

KB Data Processing Registers

Key content: The instruction introduces Data Processing Registers, which keep records of where and for what purpose KB processes personal data, either as a controller or processor.

KYC Quality Assurance

Key content: The purpose of this instruction is to implement the principles of Quality Control and Quality Assurance into the onboarding processes and regular as well as event-driven KYC checks, including the management of KYC process risks.

Monitoring: Responsibility for quality monitoring is overseen by the AML team and the KYC quality control team. Responsibility lies within the Legal Services Department.

Banking Secrecy

Key content: The purpose of this instruction is to define banking secrecy, establish its scope, outline the procedures for reporting matters that are otherwise subject to banking secrecy, the procedures for issuing, presenting, or lending items. It also delineates the authority for waiving confidentiality.

Marketing Campaigns, Events, Sponsorship, External and Internal Communication

Key content: The purpose of this regulation is to establish processes and responsibilities related to the implementation of national and regional marketing campaigns, as well as when pursuing external and internal communication and sponsorship. KB Group complies with the requirements of Act No. 40/1995 Coll., on the Regulation of Advertising, and on amendments to Act No. 468/1991 Coll., on the Operation of Radio and Television Broadcasting, as subsequently amended.

Monitoring: Responsibility for the processes established by this regulation lies with the Brand Strategy and Communication Department.

Social inclusion of consumers and end-users

Corporate Governance Principles

Key content: The directive establishes general principles regarding the governance and management of Komerční banka, a.s., including the principle of non-discrimination in relation to clients.

Monitoring: The Supervisory Board has a control role in ensuring compliance with the principles of corporate governance.

SG Code of Conduct

Key content: The SG Code of Conduct is a summary of fundamental ethical principles common to the entire SG Group. In particular, these principles include the principle of equality and justice.

Physical safety

KB Group focuses on the physical safety of its clients at branches, which is regulated by the following internal instructions:

• Principles of Using Physical Security in Komerční banka, a.s.
• Technical Security in KB Premises – General Principles for the Installation and Operation of Security Systems

Targets related to consumers

The document references that consumer and end-user targets exist and are based on client surveys and market research. According to the cross-reference table (ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions section), S4-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities is disclosed in:

• Business model and performance (section Client satisfaction, consumer protection – Measuring client satisfaction)

However, the excerpts provided do not contain the actual chapter "Targets related to consumers and end-users" or specific quantified targets related to consumers. The document indicates that:

• A summary of consumer and end-user targets is available in the chapter Consumers and end-users (section Targets related to consumers and end-users)
• The consumers and end-users targets were based on client surveys and market research
• KB Group does not currently have targets for all identified material impacts, risks, and opportunities
• Progress in meeting the targets is in line with the original plan
• Targets are regularly assessed and monitored on a quarterly basis

The specific quantified targets, target values, baseline years, and target years for consumers are not included in the provided excerpts.

Principles of activity The principles of Komerční banka's activities constitute a part of KB's governance. KB shall respect legal regulations, inclusive of international conventions to which it adheres. In its operations, KB shall respect, among others, the following general principles:

■ KB's activities shall be conducted with respect for fundamental human rights and the rights of workers. No discrimination of any kind with regard to employees, job seekers, customers, business partners, or suppliers shall be permitted. ■ KB shall respect intellectual property rights, and special emphasis shall be placed upon the honouring of software product licences. ■ KB shall respect the rules of economic competition in its activities and, especially, in its contacts with the representatives and employees of other banks and financial institutions. ■ KB shall comply with the rules for disclosure of information to the shareholders, investors in financial markets, and the general public. KB shall publish the information regarding its current situation and expected development in a timely manner, in an accessible form, sufficiently, and proportionally. ■ KB shall be active in performing its duties in fighting corruption, money laundering, and the financing of terrorism. ■ KB shall respect the privacy of its customers, business partners, and employees. Therefore, it shall request and use only such information about its customers, business partners, and employees as is needed to serve these, to enhance the quality of KB's services, to manage KB's human resources, and to comply with the obligations specified by legal regulations. ■ KB applies recognised and proven principles and procedures of corporate governance (so-called recognised standards) that it has chosen as well as policies that the controlling company, Société Générale, requires to be applied in its subsidiaries. On a standalone basis, KB applies the Code of Corporate Governance that is based upon principles of the Organisation for Economic Co-operation and Development (OECD) and the Guidelines on internal governance of credit institutions issued by the European Banking Authority (EBA Guidelines). ■ KB shall co-operate with the Czech National Bank and other regulatory bodies responsible for supervising KB's activities. It shall provide correct, complete, current, and transparent information about its activities. ■ KB supports the principle of social responsibility. It shall seek to minimise the impact of its activities on the environment and use natural resources and energy in a conservative manner. KB is governed by international conventions to which it has acceded or which were acceded to by the SG Group. ■ KB shall maintain political neutrality. It shall not back any political party or political movement through donations or any other kind of support. ■ KB shall continuously strive for long-term creation of value for its shareholders.

Moreover, KB respects a range of principles relating to specific areas, including principles regarding business conduct, dealing with clients, the management and control system, and remuneration.

Ethical conduct Only by taking an ethical approach to doing business and providing financial services can Komerční banka hope to maintain and even strengthen its market position over the long term. A fundamental prerequisite to successfully developing the company consists in professional conduct and behaviour on the part of its employees, as exemplified in particular by fostering and preserving direct and open relationships with clients and by fortifying mutual trust. Komerční banka expects all its employees to be fully aware of and committed to their obligation to act in accordance with the ethical standards set forth in its Code of Ethics and to endeavour always to adhere to those standards.

Corporate governance Komerční banka acceded to and upholds all the principal standards of the Code of Corporate Governance of the Czech Republic (2018) issued by the Institute of Administrative Bodies on the basis of international standards of corporate governance, in particular the G20/OECD Principles of Corporate Governance from 2015. Komerční banka's Board of Directors applies and develops the aforementioned principles of corporate governance in a spirit of transparency, accountability, and with a view to the long term, and it translates these best practices into its internal procedures and regulations.

Tax policy Komerční banka ensures that all KB Group companies fully respect the tax rules of all countries wherein the Group operates. Within its tax policy, Komerční banka complies with all applicable reporting obligations. Komerční banka does not encourage or promote tax evasion for itself or its clients and refrains from operations whose main purpose is tax-motivated unless this is consistent with the intention of the law.

Komerční banka strictly respects correct tax procedures and maintains open and transparent relations with tax authorities while guarding its good reputation. KB adheres to the SG Group Tax Code of Conduct, and all of KB's employees are obliged to comply with this Code. Tax policy is internally supervised by the Internal Audit arm. External oversight in relation to Czech tax law is performed by the Specialised Tax Office.

Principles of business activities and dealing with clients Business activities of KB Group companies shall be carried out in a transparent, fair, and disciplined manner in compliance with best market practice and be performed within the global framework of Société Générale Group operating rules.

KB shall not participate in transactions which might lead to the breach of any legal regulation or international agreements. KB does not, however, rule out any transaction a priori for geographical or sector reasons if the related risks are duly assessed and managed.

Clients come first. Client relations management is conducted in accordance with the know-your-customer principle and takes into account all aspects of a relationship so that the client's needs will be met under optimal service and cost conditions and at an appropriate professional level in order to promote the client's loyalty and trust in the Bank while respecting the client's legitimate interests.

The level of a client's knowledge and experience with the products and risks associated with a provided product is taken into account in providing advice.

Incidents of corruption or bribery

Confirmed incidents

Komerční banka (KB Group) explicitly states that there were no substantiated cases of corruption and bribery in the last five fiscal years. The company further confirms that "there are no ongoing external investigations by local or international authorities" related to anti-corruption or anti-bribery breaches.

Convictions and fines

KB Group reports zero convictions related to corruption or bribery violations and no fines paid for violations of anti-corruption or anti-bribery laws during the reporting period.

Disciplinary actions

The company has not reported any employees dismissed or disciplined specifically for corruption or bribery incidents during 2024.

Contracts terminated

KB Group has not disclosed any contracts with business partners terminated or not renewed due to corruption or bribery violations.

Investigation and speak-up mechanisms

KB Group has established comprehensive anti-corruption measures and investigation procedures:

• Whistleblowing system: Employees have access to secure web applications (KB WhistleB and SG WhistleB) and a dedicated email address (prislusne_osoby@kb.cz) to report rule violations, including anonymously. All whistleblowers are protected against retaliation, termination, or discrimination.

• Investigation process: Within 3 working days of submitting a report, employees receive acknowledgment. Within 15 working days, they are informed whether the report qualifies as a whistleblowing notification. A statement on investigation results is provided within 30 calendar days (extendable to maximum 90 days).

• ABC Risk Assessment: Once every 3 years, KB conducts an Anti-bribery and Corruption (ABC) Risk Assessment to identify areas with corruption or bribery risks and assess whether appropriate mitigation measures are in place.

• Task Force: In 2023, KB established a permanent working group with KB Group-wide remit to assess contractual documentation and public negative information related to corruption among clients, suppliers, and third parties. During 2024, the Task Force conducted in-depth investigations of 90 entities.

• Training: All employees, including senior management and Board members, receive mandatory anti-corruption training. Training programs cover 100% of risk functions. Specific training frequencies include:

  • Fight against corruption (online, 45 min): once in 3 years for all employees
  • Fight against corruption – most exposed people (online, 120 min): once in 2 years
  • Whistleblowing training for managers: once a year

• Reporting to management: Senior management is informed quarterly at the Compliance Committee on the number of whistleblowing alerts and whether they relate to corruption or sanctions/embargoes, including suggestions for remedial action.

Compliance incidents (non-corruption related)

While not directly related to corruption, KB Group reported compliance incidents in other areas:

• KB Penzijní společnost was fined CZK 150,000 by the Specialised Financial Office for breach of Common Reporting Standard obligations
• Komerční banka was fined CZK 150,000 for late publication of its annual report on the CNB portal
• One data protection breach in 2024 was reported to the Office for Personal Data Protection

The company states: "To date, KB has no knowledge of any external investigation of breaches of anti-corruption or anti-bribery rules in relation to it."

Political influence and lobbying activities

Political engagement approach

Komerční banka (KB) does not engage in lobbying independently. However, KB is a member of the Czech Banking Association (CBA), and KB's CEO serves as the current President of the CBA. Through this membership, KB actively participates in topics that are priorities for the CBA.

KB employees who carry out advocacy activities must comply with the rules and provisions relating to the fight against corruption and influence peddling, as described in the Société Générale Group's Code Governing the Fight Against Corruption and Influence Peddling, as well as KB's internal Advocacy policy. Employees involved in lobbying must undergo mandatory training specific to the fight against corruption.

Ethical standards and guidelines

KB strictly follows rules for asserting the Bank's interests with public authorities (lobbying). The Compliance Department is responsible for co-ordinating lobbying activities at KB.

Heads of each department are responsible, in co-ordination with the parent company SG Public Affairs Department, for all advocacy initiatives undertaken within their departments. They must ensure that such initiatives are undertaken in compliance with SG and KB commitments:

• Compliance with the commitments listed in the Société Générale Charter for responsible advocacy with public authorities and representative institutions
• Fulfilment of the obligations arising from inclusion on the Transparency Register of European Institutions
• Fulfilment of the obligations associated with the High Authority For Transparency in Public Life (HATVP: https://www.hatvp.fr/le-repertoire/) digital register
• Fulfilment of the obligations set by the Bureau du Sénat

KB employees may represent the opinions and viewpoints of KB in professional associations and other bodies of which KB is a member. A KB employee can enter into a negotiation with a public/state representative, but in such case must act in their capacity as a representative of a professional association. The opinions of KB employees are taken as those of the association and not of the Bank and therefore are not regarded to constitute lobbying.

Political contributions

Contributions to political campaigns or organisations or other groups whose role is to influence political campaigns or public policy and legislation are prohibited by internal policies. KB strictly follows a course of political neutrality and refrains from supporting any political organisations or activities through donations or subsidies, even where local law so permits.

Trade association memberships

The only contributions – in the form of standard membership fees – were made in 2024 to industry or trade associations (such as the Czech Banking Association and Czech Capital Market Association) in the amount of CZK 11.91 million.

KB is a member of the Czech Banking Association (CBA) and Czech Capital Market Association, among other organizations. A comprehensive list of memberships includes over 80 associations across KB and its subsidiaries, including:

Komerční banka memberships (selected):

• Czech Banking Association (ČBA)
• Czech Capital Market Association (AKAT)
• Association for Electronic Commerce (APEK)
• Czech Green Building Council
• Business Council for Sustainable Development (CBCSD)
• Czech Management Association
• French–Czech Chamber of Commerce in the Czech Republic
• International Swaps and Derivatives Association (ISDA)
• MasterCard International (MCI)
• Society for Worldwide Interbank Financial Telecommunication (SWIFT)
• Visa Europe, Czech Republic and Slovakia

ESSOX memberships:

• Association of Chartered Certified Accountants (ACCA)
• Association of Collection Agencies (AIA)
• Czech Banking Association (ČBA)
• Czech Lease and Financial Association

Factoring KB memberships:

• Association of Factoring Companies in the Czech Republic
• Czech Lease and Financial Association
• Factors Chain International (FCI)

Other subsidiaries:

• Modrá pyramida: The Association of Czech Building Societies
• Penzijní společnost KB: Association of Pension Companies
• SGEF: Slovak Association of Lease Companies, Czech Lease and Financial Association, Chambre de Commerce Franco-Tchéque

Focus areas / advocacy topics

KB actively participates in topics that are priorities for the Czech Banking Association, including:

• Issues related to a stable and predictable business environment in the Czech Republic
• Co-operation between the public and private sectors
• Timely and effective implementation of EU rules
• Topics related to the Czech Republic's commitments and developments in the area of ESG, including:
  • National energy concept
  • Czech Republic's climate protection policy
• Topics related to increasing the Czech Republic's competitiveness, especially in the area of digitalisation

Public office holders

In 2024, among all members of the administrative, management, and supervisory bodies, only Petra Wendelová, a member of KB's Supervisory Board, concurrently held a public office. In the reporting period, she was a member of the Finance Committee for the Prague-Suchdol Municipal District.

EU Transparency Register

KB must fulfil the obligations arising from inclusion on the Transparency Register of European Institutions (as part of Société Générale Group requirements).

Payment practices

KB Group pays invoices no later than the due date stated on the invoice and does not differentiate standard payment terms by supplier category.

Payment terms and performance (2024)

Legal proceedings

In 2024, KB Group was not involved in any court proceedings related to late payments.

Methodology notes

• The calculation of payment indicators excludes payments within KB Group (intercompany transactions)
• Standard payment terms of 30 days are defined in the General Terms and Conditions of the Komerční banka financial group
• Unless otherwise stated in individual contracts, suppliers agree to the standard 30-day payment term
• Payment practices apply to all supplier categories without differentiation